Hard Times = Boom Times for Some

I ran into an old friend who is an auctioneer the other day. He does mostly estates, farms and livestock. In the last year he's making a fortune auctioning real estate. He said the one he did on Friday was typical. A couple bought their dream home 15 years ago for 300K. It was valued in 2008 at 400K. The husband lost his high paying job last year and they put the house up for sale at 350K. Then 300, 250, 225, and no takers, no offers, not even anybody showing up for open houses. 60 days away from having it taken back by the bank, they sold it at auction for 187K. My auctioneer friend says he's already done twice as many large sales this year as he usually does in a whole year and its still August.

He banks the money but is very nervous about whats happening. The bottom has fallen out of his other auctions, nobody is buying antiques and collectibles or farm machinery, he's selling it for pennies on the dollar. An antique round oak table with massive claw feet that brought $800 in 2007 is now lucky to bring $100. He's very afraid something bad is coming but he doesn't quite know what.

Quote: EvenBob

I ran into an old friend who is an auctioneer the other day. He does mostly estates, farms and livestock. In the last year he's making a fortune auctioning real estate. He said the one he did on Friday was typical. A couple bought their dream home 15 years ago for 300K. It was valued in 2008 at 400K. The husband lost his high paying job last year and they put the house up for sale at 350K. Then 300, 250, 225, and no takers, no offers, not even anybody showing up for open houses. 60 days away from having it taken back by the bank, they sold it at auction for 187K. My auctioneer friend says he's already done twice as many large sales this year as he usually does in a whole year and its still August.

He banks the money but is very nervous about whats happening. The bottom has fallen out of his other auctions, nobody is buying antiques and collectibles or farm machinery, he's selling it for pennies on the dollar. An antique round oak table with massive claw feet that brought $800 in 2007 is now lucky to bring $100. He's very afraid something bad is coming but he doesn't quite know what.

Well, even the vultures starve when there aren't enough carcasses to feed on.

Auctioneers provide a service, without them people would be getting nothing for their property except what the bank can get out of it. They aren't vultures anymore than a mortician is when somebody dies.

Quote: EvenBob

Auctioneers provide a service, without them people would be getting nothing for their property except what the bank can get out of it. They aren't vultures anymore than a mortician is when somebody dies.

Charging each party to the transaction (buyer AND seller) 10% is indeed vulture-like behavior. It is absolutely not true that "without them, people would be getting nothing". They would get whatever they could get on the open market. Banks pressure homeowners in default to sell their property at auction, because the longer a bad loan sits on the books, the worse it is for the bank. Their motive is to sell and recover SOME money, so that they can write off the loss. They are more interested in a quick sale than getting fair value for the homeowner. The bank's interests and the defaulted homeowner's interests are diametrically opposed.

The only benefit the auctioneer offers is that of quick liquidation. This is MUCH more in the interest of the bank than the property owner; in fact, a quickie sale hurts the homeowner's interests badly. If the recourse to a quickie auction wasn't available, the bank would be forced to sell the foreclosed property at fair market value, which would also benefit the homeowner as more of his debt would be paid off. But this wouldn't exactly be the only time when the interests of the big company overrode the interests of the little guy. Auctioneers facilitate this, selling people's possessions for tiny fractions of what they are worth. The auctioneer makes beaucoup bucks for doing practically nothing; the banks get theirs; the little guy gets ass-fucked. 'Twas ever thus.

I've been going to auctions for 35 years and sometimes items do go for bargain prices, but often as not they go for far more than they're worth. How much an item is worth is determined at the sale, you never know what will happen. I have filled my van and have gone home with nothing. I've been to auctions where new high prices were set for collections. I've seen a $2000 item go for $200 and a $100 item go for $1000. In 1997 I went to the public auction in Shipshewana IN as a seller for 22 weeks in a row and I made a profit every week, sometimes I tripled my money. You can't make a blanket statement about auctions, it all depends on whats for sale and who's there to buy it.

In some states, such as Arizona, strict compliance with the laws regarding notice of the auction is required and is deemed an irrebutable presumption that a sufficient body of potential buyers was present. In some states, failure to adhere strictly to the notice requirements may be forgiven. The problem arises when despite sufficient notice only vultures attend because the market has dried up in the flagging economy. Here, the owner of the asset is deemed to have had a fair auction but the prices are not fair because only vultures are doing any buying.
Some auctioneers have followers who attend, but do no competitive bidding. Its more a club of friendly bidders. Many "estate sales" and the like are absurdly ill-attended now and items go for a song.

Vulture funds for a while were the only ones buying condos in Miami. Even in Las Vegas, Condo Flipping is now the province of Vulture Funds that buy a condo at noon and sell it at a higher price at 3:00pm. Owners and developers often prefer to deal with vultures but its hard to obtain a fair price under those market conditions.

Quote: FleaStiff

In some states, such as Arizona, strict compliance with the laws regarding notice of the auction is required and is deemed an irrebutable presumption that a sufficient body of potential buyers was present. In some states, failure to adhere strictly to the notice requirements may be forgiven. The problem arises when despite sufficient notice only vultures attend because the market has dried up in the flagging economy. Here, the owner of the asset is deemed to have had a fair auction but the prices are not fair because only vultures are doing any buying.
Some auctioneers have followers who attend, but do no competitive bidding. Its more a club of friendly bidders. Many "estate sales" and the like are absurdly ill-attended now and items go for a song.

Vulture funds for a while were the only ones buying condos in Miami. Even in Las Vegas, Condo Flipping is now the province of Vulture Funds that buy a condo at noon and sell it at a higher price at 3:00pm. Owners and developers often prefer to deal with vultures but its hard to obtain a fair price under those market conditions.

The very nature of the auctions: poorly advertised, restricted to buyers who can put up a large cash deposit, or sometimes not even open to the public, pretty much guarantees that the prices the auctioned properties will go for will be extremely lowball. In the case of professional/freelance vultures, they often agree among themselves not to bid on the properties another is most interested in: there is honor among thieves.

Quote: EvenBob

He banks the money but is very nervous about whats happening. The bottom has fallen out of his other auctions, nobody is buying antiques and collectibles or farm machinery, he's selling it for pennies on the dollar. An antique round oak table with massive claw feet that brought $800 in 2007 is now lucky to bring $100. He's very afraid something bad is coming but he doesn't quite know what.

Things ebb and flow. Part of it is good news--if you want that antuque table now is the time to buy. Prices can't keep climbing forever. Look at real estate--as late as 2006 in Phoenix (and Vegas) went to $300K+. Problem was the wage base did not follow. Same for cars. I remember walking a lot with my brother, a Ford lot, loaded with Expeditions all >$40K. Who was buying all of this stuff?

Eventually the credit bubble burst and we are paying for it now. The danger will be if government tries to prop up prices. It is far better if a person loses $200K on a house but a person who can afford $100K buys it than to keep propping up the guy who can't afford the $300K mortgage.

I'm not sure why people who buy at distressed sales are 'vultures'. For whatever reason, the seller is selling, how is that the buyers fault? If the seller doesn't know he might take a bath, how is that the buyers fault? 99% of the time the buyer knows exactly whats going on and has no choice but to go through with it. How come nobody ever cries for the buyer when he pay 3 times what something is worth? When that happens its HIS fault for not educating himself, but when a seller gets hosed, its ALWAYS the buyers fault for 'taking advantage' of him. Get real, people are responsible for their actions, and that means buyers and sellers. We're dealing with adults here, not 2nd graders.

Quote: EvenBob

I'm not sure why people who buy at distressed sales are 'vultures'. For whatever reason, the seller is selling, how is that the buyers fault? If the seller doesn't know he might take a bath, how is that the buyers fault? 99% of the time the buyer knows exactly whats going on and has no choice but to go through with it. How come nobody ever cries for the buyer when he pay 3 times what something is worth? When that happens its HIS fault for not educating himself, but when a seller gets hosed, its ALWAYS the buyers fault for 'taking advantage' of him. Get real, people are responsible for their actions, and that means buyers and sellers. We're dealing with adults here, not 2nd graders.

Very simple. The seller at the kinds of auctions we were talking about (foreclosure quickie sales, seized property liquidations) is NOT in the process voluntarily. In fact, he's not actually even the seller--he's the former owner. Banks want to liquidate the property as quickly as possible, even if it means selling the property it seized for a tiny fraction of its value. The former owner gets fucked over because the proceeds don't even come close to paying off his debt, especially not with the fines and fees and surcharges and interest charges.

The presence of the vultures facilitates all this. If there weren't these greedy people hovering nearby, ready to take advantage of people's misfortunes, then the banks would be forced to sell the properties for something approximating market value. But fortunately for the banks, there are always the carrion-eaters nearby, ready to feast on someone else's misfortune.

then the banks would be forced to sell the properties for something approximating market value.>>

To WHO? Or is it whom. Auctions very much reflect market value at the time they're held, they always have. Its the most asked question asked at auctions, 'Whats it worth?'. And the answer is always 'We're about to find out.' They used to be called 'fire sales' and have been around since time began, or close to it. Is it 'fair'? What the heck does fair have to do with anything. Its not supposed to be 'fair', its supposed to move property, and that it does, very effectively. Its part of the dynamic of the free market place. Maybe you should move to a country where everything is controlled by the gov't and everything is 'fair' and everybody is equally miserable..

auctions, consignment stores, Walgreens, Walmart and Mcdonalds are all doing well.

Mcdonald's had 6% and 8% increases in operating income in 2008 and 2009. Pretty hard to argue with that.

Quote: pacomartin

auctions, consignment stores, Walgreens, Walmart and Mcdonalds are all doing well.

Mcdonald's had 6% and 8% increases in operating income in 2008 and 2009. Pretty hard to argue with that.

How dare McDonalds exploit people in these hard times by offering reasonably priced menu items, just so they can grow as a corporation. They should be giving it away for free, that would be 'fair'.

Quote: EvenBob

then the banks would be forced to sell the properties for something approximating market value.>>

To WHO? Or is it whom. Auctions very much reflect market value at the time they're held, they always have. Its the most asked question asked at auctions, 'Whats it worth?'. And the answer is always 'We're about to find out.' They used to be called 'fire sales' and have been around since time began, or close to it. Is it 'fair'? What the heck does fair have to do with anything. Its not supposed to be 'fair', its supposed to move property, and that it does, very effectively. Its part of the dynamic of the free market place. Maybe you should move to a country where everything is controlled by the gov't and everything is 'fair' and everybody is equally miserable..

Bob buddy, it's obvious from your posts that you're a hard-core, dyed-in-the-worsted-slacks-and-blazer conservative. Your belief system says that there is no such thing as an unfair transaction, in that if the transaction is made, it is ipso facto fair. Reasonable enough, except for a couple of things you're missing (ideology produces that sort of omission):

First of all, what the heck does fair have to do with anything? It has EVERYTHING to do with the very nature of commerce and trade. The auction is the final phase of a contract between the lender and the homeowner. A conservative such as yourself should endorse the absolute sanctity of contracts, and contract law, which says that a party that acts in bad faith nullifies the contract. By selling the property in quickie fashion, rather than on the open market, the bank acts in bad faith, putting its interests ahead of the homeowner's.

Second, it's just plain silly to say that auctioned properties go for fair market value. If that were true, none of the vultures would show up, and they particularly wouldn't pay the buyer's premium.

In the future, please try to resist the urge to end every single one of your posts with some variation of the phrase, "Iffen yew done lahk it yew kin jest move somewheres else (honk)." Conservatives like yourself should acknowledge that I have the right to dislike something about the way things work, and to express that dislike, and remaining silent or fleeing the country are not the only two options. People are getting screwed big time because of that noble free market you espouse, and government intervention to stop that sort of thing from happening has been going on since well before you were born. I suggest you temporarily abandon your reflexive, right-wing-nut rhetoric and attitudes and pick up a history book, or better still, one on economics. The free market is a wonderful mechanism, but its operation also hurts a lot of people.

Quote: EvenBob

Auctions very much reflect market value at the time they're held, they always have.

Over time, we've moved from a barter type economic system to one in which the seller of an item determines the "value" of the item. Auctions very much bring back buyers into having a say in what the value of an item is.

While I have many issues with home auctions, I think there is a lot of subjectiveness in the issue. Here in Arizona, at least, many homes are going into short sale / foreclosure / auction simply because people got greedy and refinanced their homes beyond their ability to pay for them. While their inability to pay may have resulted in the loss of a job, it's usually clear that had they never refinanced, and had their original loan payments, they would not be losing their home. Unfortunately, there became an idea that a home is an "investment" or an "asset", which it clearly is not, and never should be thought of in such a way. Greed on the part of the homeowner, greed on the part of the bank, greed on the part of appraisers all contributed to the problem.

Fortunately, the majority of homeowners who face short sale / foreclosure / auction are only facing the simple difficulty of being without a home. Here in Arizona, as in many states, anti-deficiency laws prevent banks from suing a former homeowner for the balance of a loan. And, the current IRS Mortgage Debt Relief Act allows a former primary home owner to not have to include the written off loan as income. For those people who truly are having a hard time making their payment, simply issuing a deed in lieu to the bank, and finding an apartment, results in no loss other than whatever payments they had made on the home to begin with.

My primary issue with home auctions has nothing to do with the (original) home owners, but rather to those of us trying to buy houses. The banks are utilizing auctions in what I feel is a dishonest manner. Here is what happened to me. I put in an offer on a house. (One that had been torn up by the previous owners when they were foreclosed on, but that's besides the point.) Bank received my offer and told me they were thinking on it and would get back to me with a decision. A couple of weeks later, I find out that the home is going up for public auction. I was never notified about this. I attended the auction at the courthouse. The starting bid on the home was the same as my offer. This was my first time attending a public courthouse auction. Unfortunately, the resulting bids went higher than what I was willing to pay for the house. I talked with several people at the auction, who clearly had much experience in buying houses at these auctions and were also clearly investors. As I explained my situation, several individuals indicated that this was a common tactic from the banks. If there was no bids at the auction, they were pretty much guaranteed to be able to sell the house to the individual who made the offer (i.e., me). On the other hand, they stand a pretty good chance of having the house sell for more money at the auction. Anyway, my issue with the home auctions is petty and personal, and I completely realize this. But I still dislike it, since I want to buy a house.

Quote: konceptum

Over time, we've moved from a barter type economic system to one in which the seller of an item determines the "value" of the item. Auctions very much bring back buyers into having a say in what the value of an item is.

Fortunately, the majority of homeowners who face short sale / foreclosure / auction are only facing the simple difficulty of being without a home. Here in Arizona, as in many states, anti-deficiency laws prevent banks from suing a former homeowner for the balance of a loan. And, the current IRS Mortgage Debt Relief Act allows a former primary home owner to not have to include the written off loan as income. For those people who truly are having a hard time making their payment, simply issuing a deed in lieu to the bank, and finding an apartment, results in no loss other than whatever payments they had made on the home to begin with.

The anti-deficiency laws have a hidden cost, in that banks in states that have such laws charge higher origination fees, more points, and higher interest rates for home loans. This is because those laws create a higher risk of loss for the banks.

The true loss for the deed-in-lieu former homeowner would be the difference between the cost of renting a similar property and what his monthly payment actually was, plus all property taxes paid, maintenance, moving expenses (in AND out), as well as origination fees, points, etc. paid to get the loan in the first place. It's a not inconsiderable sum---walking away turns all those costs from investments into sunk costs. Then the bank lards on so many fees and interest charges that the sale is usually a short sale, so the former homeowner isn't even out of debt. And believe me, even if a bank can't legally collect the deficiency balance, it'll still completely trash the borrower's credit rating.

The credit rating is destroyed, but it would be destroyed anyway regardless. The fact remains that the person has already defaulted on their home loan, in the simple fact that they cannot afford to pay for it. Shorts sales do not trash a credit rating as bad as foreclosures, technically, but the difference is so minimal as to not make much of a difference. And, as long as their is an anti-deficiency law in the state, then the bank is unable to collect on any part of the mortgage loan, including any fees and interest charges, regardless of short sale or foreclosure.

The majority of these home owners, at least the ones in Phoenix, caused their own problems due to their own greed, and I don't feel sorry for them. In the example of the house I wanted to buy, the couple bought the house in 1999 for $86k, with only $1k down, and a fair interest rate. Then they refinanced in 2007 for $145k, with a higher interest rate, which of course makes no sense to me. While I have no idea what they do with the nearly $60k from the refinance, it is clear that they did not use any of the money in improving, repair, or fix-up the home. That is fairly typical of the refinances done in Phoenix. Prior to the auction, the county assessor valued the home at $55k. At the auction, the home sold for $42k. If the people had simply saved the $60k from the re-finance even in a shoe box under their bed, they would have been able to purchase back their own home, and own it free and clear. They received more in re-finance money than their home is even worth today.

A friend of my ex refinanced her house twice, and used the money both times to buy new cars, pay off debts, and gamble. She lost the house, and it sold for around 30% of what she owed on the mortgage.

I know there are some people that did the right things, and still suffer bad economic times and lose their homes. I do feel sorry for those people. But the numbers show that the majority of foreclosures and short sales are happening due to people refinancing a primary home, and they shouldn't have done that. Gambling with your primary home is a bad idea.

Quote: Wizard's Commandments

5. Before you gamble determine what you can safely afford to gamble with - as entertainment money. Stick to your limits and don't gamble with money you need for necessities.

Real estate is still a good investment, IF, it is indeed an investment and is used as an asset, and not as a primary home. People allowed themselves to be duped into believing their primary home was an investment or an asset, and their greed caused them to be in the situations they are now, facing foreclosure.

I spoke with a guy who is losing his home to foreclosure. He had refinanced it twice. Then the job economy turned sour on him, he lost his job, and now he can't make his payments. His comment to me was that he didn't create this economy. While I agree that he did not create the lack of jobs, his greed in refinancing twice did create his personal situation. Not refinancing would not have changed his loss of job, perhaps, but he wouldn't need to come up with as much money, and his home would be worth closer to what he owed, rather than the inflated amount he refinanced for.

Many people chose not to refinance their homes even though they could, simply because it didn't make sense to gamble with their primary homes. Those people very rarely face foreclosure issues. They may lament that their home isn't "worth" what it was three years ago, but at least they still have a home.

Quote: konceptum

The majority of these home owners, at least the ones in Phoenix, caused their own problems due to their own greed, and I don't feel sorry for them.

Surely you realize that this is a subjective statement and cannot possibly be backed up by facts.

I am always so amused when Person A sees Person B trying to acquire some money and Person A calls it "greed". Maybe a person who refinances wants cash because he and his wife are having a child. Maybe they are going to grad school. Maybe they want to start a massive collection of bubble gum cards. Why is it "greedy" to convert an existing asset (home equity) to cash? For one thing, it kind of contradicts the idea of "greed" if you don't gain anything by doing it.

I realize that the populist, cocktail-party view of the housing bubble is that everybody was greedy, greedy, greedy and what happened to banks and homeowners was their own fault (while I, says the preening pundit holding a gin and tonic, was wise and not greedy and perspicacious, so I didn't lose anything). However, the simple cause of the whole mess was that the price of money became historically low. This in turn compelled lenders to broaden their market, i.e., lend to those who they had, up to that point, considered to be unworthy scum. This is turn increased the demand for homes, which created a building boom. Then the recession hit, and the killer was that so many of those mortgages were adjustable-rate. The combination of loss of earnings and the banks jacking up interest rates created a perfect storm. In retrospect, the banks never should have initiated mass foreclosures, because that depressed the housing market even further. Plus, as you saw, foreclosed properties deteriorate quickly.

So this was no one's "fault"--it was an unfortunate and unique combination of market forces and events. I absolutely do not blame the home buyers--many of them had been shat upon by the banks all their lives, told that their earnings/credit/human worth were insufficient to buy a house, which, after all, they had been told was both the American Dream and a good investment. Who can blame them for leaping at the opportunity? Especially considering that the whole strategy would have worked if the recession hadn't hit at precisely the wrong time (a few years later, and many of those homebuyers would have built up some equity).

The populists are attending cocktail parties now?

Surely Washington had a hand in "broadening the market." I'm not sure what reasoning lies behind the federal government guaranteeing mortgages.

I don't know which people have been "shat upon all their lives by the banks", unless you equate being turned down for a mortgage with being shat upon. Surely a bank can deny an applicant for sound financial reasons, separate from that "Insufficient Human Worth" box on the application.

It seems to me there's been an erosion in the idea of thrift and personal responsibility; saving for a down payment in a period in which interest-only proliferated became a quaint idea.

So I come from the other direction. Rather than nobody's fault, I think there's blame all around: policies from Washington that distorted markets, banks eager to collect mortgage-related fees, and homeowners who took what is usually the biggest purchase of their lives too lightly.

Quote: EvenBob

How dare McDonalds exploit people in these hard times by offering reasonably priced menu items, just so they can grow as a corporation. They should be giving it away for free, that would be 'fair'.

McDonald's cleverly exploited their image as a value place to eat. They began to offer more expensive Angus beef sandwiches since they are still cheaper than any bargain steakhouse. They began to offer high priced coffees and wi-fi at prices slightly lower than Starbucks. In any case, most people feel like they are cutting costs by buying a latte at a McDonalds than a Starbucks.

It's quite ingenious of them. They actually introduced higher price goods in a recession and are making a huge increase in profits.

Burger King has a better quality products on their $1 menu than McDonalds, but they are suffering a loss of revenue during this recession. I see they have adopted "Seattle's Best" for their coffee (which is owned by Starbucks). However, I think it is a nudge, at best.

Quote: mkl654321

Very simple. The seller at the kinds of auctions we were talking about (foreclosure quickie sales, seized property liquidations) is NOT in the process voluntarily. In fact, he's not actually even the seller--he's the former owner. Banks want to liquidate the property as quickly as possible, even if it means selling the property it seized for a tiny fraction of its value. The former owner gets fucked over because the proceeds don't even come close to paying off his debt, especially not with the fines and fees and surcharges and interest charges.

The presence of the vultures facilitates all this. If there weren't these greedy people hovering nearby, ready to take advantage of people's misfortunes, then the banks would be forced to sell the properties for something approximating market value. But fortunately for the banks, there are always the carrion-eaters nearby, ready to feast on someone else's misfortune.

This is the most preposterous comment that I've read today - among a great many. Your claim is that "vulture" buyers somehow facilitate people getting screwed over? Quite the contrary, in a true short-sale, these "vultures" actually often save the seller's credit that would otherwise be fully destroyed by a complete foreclosure. The banks very rarely go after the seller's for the deficiancy in a short-sale situation, unless the seller has substantial assets.

What on earth makes you think that banks could sell properties that have been vacated/abandoned at closer to retail value than the owners could when they were trying to sell the property themselves? Your comment shows a complete lack of knowledge of the real estate market.

Quote: Calder

The populists are attending cocktail parties now?

I don't know which people have been "shat upon all their lives by the banks", unless you equate being turned down for a mortgage with being shat upon. Surely a bank can deny an applicant for sound financial reasons, separate from that "Insufficient Human Worth" box on the application.

It seems to me there's been an erosion in the idea of thrift and personal responsibility; saving for a down payment in a period in which interest-only proliferated became a quaint idea.

The populist sentiment is rampant at such gatherings. So is the proffering of shallow, not-well-thought-out opinions, and sweeping pronouncements that trivialize complex issues. Thought Lite.

The people that have been kicked around are those that are honest and hardworking, but don't "qualify" to buy the bank's products. Despite the fact that a bank charges criminally excessive fees to write a mortgage for their less creditworthy customers, and jacks up the interest rates as well, the banks still paint a picture of being subject to horrific exposure (as they whine to the Fed). Several years ago, many mortgage brokers decided that these people weren't such unworthy human garbage after all, and as long as they had earnings, well, why not sell them money as well, and steal a march on the market. It was a brilliant business decision, even the the context of the subsequent recession: the mortgage brokers made out like bandits, and it has to be remembered that over eighty percent of those "sub-prime" mortgages are still current and performing, so the lenders are continuing to earn interest that they never would have if they hadn't loosened up their "standards". Since such loans are always collateralized, in retrospect, it was bad business to deny the less creditworthy those loans, again, even taking the recession into account.

I also think that the populist mantra of "the erosion of thrift and responsibility" is getting a little stale. For one thing, anyone who decides to devote his resources to purchasing a home to live in is being both thrifty AND responsible. "Saving for a down payment" has an opportunity cost, as does tendering that payment when the time comes; that money could be, and could have been, used for other things, including earning money in an interest-bearing account. Taking out a mortgage with little or money down may very well have been a sound strategy; just because tha banks used to compel a 20% down payment doesn't mean that that was a good idea for the borrower.

Quote: mkl654321

First of all, what the heck does fair have to do with anything? It has EVERYTHING to do with the very nature of commerce and trade. The auction is the final phase of a contract between the lender and the homeowner. A conservative such as yourself should endorse the absolute sanctity of contracts, and contract law, which says that a party that acts in bad faith nullifies the contract. By selling the property in quickie fashion, rather than on the open market, the bank acts in bad faith, putting its interests ahead of the homeowner's.

Second, it's just plain silly to say that auctioned properties go for fair market value. If that were true, none of the vultures would show up, and they particularly wouldn't pay the buyer's premium.

Auctions can occur on the complete oppositie side as well during a market bubble. In 2005-2006 sellers were in practice "auctioning" their homes by not even having list prices in hot markets, or listing homes that had "offers starting at $xxx" and going up from there.

Banks are under ZERO obligation by contract, or ethics, or anything else to act in the interest of the homeowner who has defaulted on their loan. In fact, since banks don't even really own the loans, but just act as servicers for the bondholders, they would be acting in bad faith to mortgage-backed securities investors if they did not do everything in their power to recover the most they could from defaulted assets. Again, your commnets are showing you have zero clue what you are talking about.

Quote: ruascott

This is the most preposterous comment that I've read today - among a great many. Your claim is that "vulture" buyers somehow facilitate people getting screwed over? Quite the contrary, in a true short-sale, these "vultures" actually often save the seller's credit that would otherwise be fully destroyed by a complete foreclosure. The banks very rarely go after the seller's for the deficiancy in a short-sale situation, unless the seller has substantial assets.

What on earth makes you think that banks could sell properties that have been vacated/abandoned at closer to retail value than the owners could when they were trying to sell the property themselves? Your comment shows a complete lack of knowledge of the real estate market.

The seller's credit is already toast when he stops making payments. As far as impact on credit history goes, there is almost no difference between a foreclosure sale, a short sale, or a complete default. Just because the banks don't go after the deficiency balance doesn't mean they don't report the borrower to the credit agencies for that deficiency.

As I've explained elsewhere, the banks have a motive that is different from the seller: the seller naturally wants to get the best price possible; the bank wants to dump the property at any price so it can write off the loan. This means that since the bank completely controls the transaction, the seller gets the shaft. And of COURSE auctioned properties sell for less than they would on the open market: auctioneer's fees have to be paid, the pool of buyers is far more restricted than on the open market, and the vultures have to make enough profit to justify their showing up. All these factors reduce the proceeds that are credited to the seller's account.

It is a simple truism--one that if YOU understood the market, you would understand--that a property sold in thirty seconds will bring a lower price than one sold in six months. If the quickie "out" of dumping the property to auction vultures wasn't available, then the bank would be forced to sell the property at fair market value. Of course, that would increase the bank's costs--so it's easier to hose the powerless seller instead.

You are likely one of those guys who sits behind a desk and harrumphs when anyone suggests that the little guy gets screwed in these kinds or transactions, but your refusal to perceive the unfairness isn't relevant.

And I may be in complete disagreement with you, but that doesn't by any stretch of the imagination equate to a "complete lack of knowledge". In point of fact, I've held a real estate license since 1995, and have bought and sold seven of my own houses since then. So your uninformed opinion about me is--how shall I put this--utter nonsense.

Phil Ruffin sold the New Frontier casino after nine years of ownership for $1.3 billion at about a billion dollars more than he paid for it.

Only 83 weeks after agreeing to sell the New Frontier, he purchased the Treasure Island Casino at the bargain rate of only $775 million. He permitted his wife (who is about a half century younger than him) to design the spa.

That series of deals traded a 65 year old casino with less than a 1000 rooms, for a 15 year old casino with almost 3000 rooms, and still having over half a billion dollars left over.

I wish I had done that. I wouldn't care if you called me a vulture. Color me green.

Quote: mkl654321

The seller's credit is already toast when he stops making payments. As far as impact on credit history goes, there is almost no difference between a foreclosure sale, a short sale, or a complete default. Just because the banks don't go after the deficiency balance doesn't mean they don't report the borrower to the credit agencies for that deficiency.

As I've explained elsewhere, the banks have a motive that is different from the seller: the seller naturally wants to get the best price possible; the bank wants to dump the property at any price so it can write off the loan. This means that since the bank completely controls the transaction, the seller gets the shaft. And of COURSE auctioned properties sell for less than they would on the open market: auctioneer's fees have to be paid, the pool of buyers is far more restricted than on the open market, and the vultures have to make enough profit to justify their showing up. All these factors reduce the proceeds that are credited to the seller's account.

It is a simple truism--one that if YOU understood the market, you would understand--that a property sold in thirty seconds will bring a lower price than one sold in six months. If the quickie "out" of dumping the property to auction vultures wasn't available, then the bank would be forced to sell the property at fair market value. Of course, that would increase the bank's costs--so it's easier to hose the powerless seller instead.

You are likely one of those guys who sits behind a desk and harrumphs when anyone suggests that the little guy gets screwed in these kinds or transactions, but your refusal to perceive the unfairness isn't relevant.

And I may be in complete disagreement with you, but that doesn't by any stretch of the imagination equate to a "complete lack of knowledge". In point of fact, I've held a real estate license since 1995, and have bought and sold seven of my own houses since then. So your uninformed opinion about me is--how shall I put this--utter nonsense.

Of course it would bring a lower price, but that ignores the cost of the foreclosure, the maintenance costs of holding the property (including property taxes), the real estate agents fees when the REO is sold, and the time value of money for the bank and/or bondholder.

As I already said, the bank managers fiduciary responsibility is to the actual mortgage owner or in a case where the bank actually portfoliod the loan, the banks shareholders --- NOT the homeowner. And you have conveiniently ingored the fact that the seller likely had in excess of a year to sell the home at or below your magical "fair value". It didn't sell because the property isn't worth it.

I shed no tears for whining banks, but by placing "qualify" in quotation marks, you seem to imply that they're acting improperly. Should there be no financial qualifications for a mortgage? You don't find "jacking up interest rates" for "less creditworthy customers" a rational decision with regard to credit risk?

You paint the eighty percent performance of sub-primes as good news, but foreclosures are at or near historical highs.

Quote: mkl654321

anyone who decides to devote his resources to purchasing a home to live in is being both thrifty AND responsible.

Absent details about someone's personal finances, this strikes me as one of those "sweeping statements" you decry in others.

All decisions carry an opportunity cost. Presumably those who save for a down payment keep it in an interest-bearing account. A no-money-down mortgage may have been a good idea, but I think part of the problem was an irrational exuberance on the part of some home buyers, who believed that home values moved in only one direction.

While the banks didn't compel a 20% down payment, there is a rational argument for the buyer to accumulate those funds. Had more home buyers deferred gratification (perhaps another populist mantra?) and saved for that down payment, this crisis would have been far less severe.

In the end, I find thrift and responsibility serves people well, more often than not; you and I simply disagree on what defines those terms.

Quote: mkl654321

Why is it "greedy" to convert an existing asset (home equity) to cash?

This is the problem. People are still trying to think of their primary home, or home equity if you will, as an asset. The bottom line is that assets generate revenue. Pure and simple. Anything else is not an asset, and your primary residence is not an asset. Gambling with your primary residence is silly and ridiculous. It doesn't matter what the money was used for, because the same effects could have been accomplished had the person just waited and saved up the money. The idea of refinancing the home and taking out cash was one of greed. The greed of wanting the cash for now, rather than waiting to save up the money. The greed is not solely on the shoulders of the homeowner either. The banks were greedy, mortgage brokers were greedy, and appraisers were greedy as well. Regardless, the reasons for refinancing are not as relevant as the gamble that people made with their primary residence. A gamble they have now lost and are forcing them to be homeless.

Quote: mkl654321

... to buy a house, which, after all, they had been told was both the American Dream and a good investment. Who can blame them for leaping at the opportunity? Especially considering that the whole strategy would have worked if the recession hadn't hit at precisely the wrong time (a few years later, and many of those homebuyers would have built up some equity).

Indeed. Once again, the people are told their primary residence is "good investment", when in reality it is the place in which they are living. I only hope that many people are learning this, albeit expensive, lesson, and will next time not gamble with their primary residence.

Quote: konceptum

your primary residence is not an asset

While I understand your point, and agree that too many people use home equity to purchase consumer goods, I doubt many people agree with your definition of asset.

Quote: konceptum

This is the problem. People are still trying to think of their primary home, or home equity if you will, as an asset. The bottom line is that assets generate revenue. Pure and simple. Anything else is not an asset, and your primary residence is not an asset. Gambling with your primary residence is silly and ridiculous. It doesn't matter what the money was used for, because the same effects could have been accomplished had the person just waited and saved up the money. The idea of refinancing the home and taking out cash was one of greed. The greed of wanting the cash for now, rather than waiting to save up the money. The greed is not solely on the shoulders of the homeowner either. The banks were greedy, mortgage brokers were greedy, and appraisers were greedy as well. Regardless, the reasons for refinancing are not as relevant as the gamble that people made with their primary residence. A gamble they have now lost and are forcing them to be homeless.


Indeed. Once again, the people are told their primary residence is "good investment", when in reality it is the place in which they are living. I only hope that many people are learning this, albeit expensive, lesson, and will next time not gamble with their primary residence.

The real difference is that most people tapped home equity to consolidate OTHER DEBT (CCs, auto loans, etc..) that was caused by attempting to live lifestyles beyond the means of their incomes. Most of this overspending happened incrementally, not in large, major transactions. Once the debt service payments became too large, people bailed themselves out with HELOCs and cash-out refis.

Quote: ruascott

Of course it would bring a lower price, but that ignores the cost of the foreclosure, the maintenance costs of holding the property (including property taxes), the real estate agents fees when the REO is sold, and the time value of money for the bank and/or bondholder.

As I already said, the bank managers fiduciary responsibility is to the actual mortgage owner or in a case where the bank actually portfoliod the loan, the banks shareholders --- NOT the homeowner. And you have conveiniently ingored the fact that the seller likely had in excess of a year to sell the home at or below your magical "fair value". It didn't sell because the property isn't worth it.

The property taxes will be billed by the bank to the homeowner and subtracted from whatever proceeds the seller receives (or whatever credit he receives against his mortgage balance). And banks don't maintain properties in foreclosure--that's why they are often disintegrating by the time they are sold. The real estate fees are also billed to the seller, as is the time value of the money, i.e., interest. Then the bank slathers on massive additional fees and penalties. They've got it all covered. In fact, until very recently a bank would have been EAGER to foreclose on most properties, because they have stacked the deck to ensure that they won't lose money no matter what.

I disagree that the bank has no fiduciary--OR MORAL--responsibility to its customer, the borrower. I do acknowledge that any actions the bank takes will be with the sole consideration of what makes it the most profit (or creates the least loss). What I consider criminal is that the bank strips away tens of thousands of dollars of value from the homeowner, in order to save itself a few hundred dollars. The rest goes into the pockets of the auctioneers and the vultures.

And the concept of fair value would only seem "magical" to someone who isn't getting screwed out of that fair value.

edited

Quote: mkl654321

The property taxes will be billed by the bank to the homeowner and subtracted from whatever proceeds the seller receives (or whatever credit he receives against his mortgage balance). And banks don't maintain properties in foreclosure--that's why they are often disintegrating by the time they are sold. The real estate fees are also billed to the seller, as is the time value of the money, i.e., interest. Then the bank slathers on massive additional fees and penalties. They've got it all covered. In fact, until very recently a bank would have been EAGER to foreclose on most properties, because they have stacked the deck to ensure that they won't lose money no matter what.

I disagree that the bank has no fiduciary--OR MORAL--responsibility to its customer, the borrower. I do acknowledge that any actions the bank takes will be with the sole consideration of what makes it the most profit (or creates the least loss). What I consider criminal is that the bank strips away tens of thousands of dollars of value from the homeowner, in order to save itself a few hundred dollars. The rest goes into the pockets of the auctioneers and the vultures.

And the concept of fair value would only seem "magical" to someone who isn't getting screwed out of that fair value.

Again, if a home had been on the market for >1yr, and had not received the "fair value" why do you assume its going to happen in another 6 months?? There is nowhere in your example where the bank is "stripping away tens of thousands of dollars of value" from the homeowner. The "VALUE" IS NOT THERE.

Quote: Calder

While I understand your point, and agree that too many people use home equity to purchase consumer goods, I doubt many people agree with your definition of asset.

Very true. And unless people sit down with a competent financial advisor who shows them the difference between a true asset and an "on paper" asset, they never will agree with me. :) But, I'm used to people not agreeing with me.

Quote: EvenBob

then the banks would be forced to sell the properties for something approximating market value.>>

To WHO? Or is it whom. Auctions very much reflect market value at the time they're held, they always have. Its the most asked question asked at auctions, 'Whats it worth?'. And the answer is always 'We're about to find out.' They used to be called 'fire sales' and have been around since time began, or close to it. Is it 'fair'? What the heck does fair have to do with anything. Its not supposed to be 'fair', its supposed to move property, and that it does, very effectively. Its part of the dynamic of the free market place. Maybe you should move to a country where everything is controlled by the gov't and everything is 'fair' and everybody is equally miserable..

So, if 10 vultures pick out 10 $200,000 homes and agree that each smelly bird gets to buy 1 of them for $50,000, as the
sole bidder, and there are no good faith bidders otherwise present, then that's fair collusion in your eyes?

Quote: ruascott

Again, if a home had been on the market for >1yr, and had not received the "fair value" why do you assume its going to happen in another 6 months?? There is nowhere in your example where the bank is "stripping away tens of thousands of dollars of value" from the homeowner. The "VALUE" IS NOT THERE.

Most homes sold in foreclosure have not been "on the market" for any longer than a brief period, and some never reach the market at all before being sold at auction. The owner won't try to sell unless all means of maintaining payments on the mortgage have been exhausted, and then the bank cannot sell until it assumes legal title. Auctioned homes have indeed often been IN FORECLOSURE for many months, but that does NOT mean that they have been for sale to the general public. In point of fact, one the bank acquires title (by lien), it moves to dispose of the property as swiftly as possible, so such a property receives little or no exposure on the open market.

The value that is lost is the difference between what the house would have sold for on the open market, and the severely discounted price that it goes for instead at auction. The seller, the former homeowner, pays not only that discount, but also auctioneer's fees, bank fees, bank penalties, etc.--and the clock doesn't stop on his mortgage, either. By the time he pays all these costs, the seller's proceeds are often a small fraction of his original mortgage balance.

My point, which seems to have gone whistling right over your head, is that the foreclosure and auction sale process hurts the buyer severely, and part of the damage done is that the home is sold for far LESS than fair market value, even considering the deteriorated condition of many such homes. If banks were forbidden to seize and quickie-sell homes with delinquent mortgages, then auctioneers, banks, and lawyers would make less money, but at least the person who has lost his home wouldn't also be saddled with a mountain of debt that was brought about by having to pay those auctioneers, banks, and lawyers, not to mention providing a juicy moneymaking opportunity for some vulture.

Quote: konceptum

Very true. And unless people sit down with a competent financial advisor who shows them the difference between a true asset and an "on paper" asset, they never will agree with me. :) But, I'm used to people not agreeing with me.

A home is an asset. A brick of gold is an asset. A college degree is an asset. A bunch of bananas in your fruit bowl is an asset.

An "asset" does NOT only mean "something that makes money" or "something that produces wealth". There's a reason why most people don't agree with your defintion of asset: it's incorrect.

The definition of an "on-paper" asset would be one that has no value, but is purported to have value nonetheless. Real property, however, always has SOME value, and its market price is always intrinsic value+subjective value, as in, it's a wooden box that you can sleep in, and it's two blocks from the local art museum.

I'm certainly no economist. I recall some sort of definition of free-market value of an item being what a willing buyer and a willing seller will agree to when neither of them has to engage in the transaction. Unfortunately, in today's housing market, there are a whole bunch of sellers who are not really engaging in the transaction willingly. This results in a very distorted picture for market values. This is in addition to any market correction related to the artificial housing bubble that existed in many areas.

I think the current problem is that the traditional buyers have almost disappeared from the market, with the exception of a few that were drawn in by the combination of low prices and government incentives. Most of them seem only to purchase when the seller has reached a point of desperation and sells for far less than the property would have sold for two or three years ago and will likely sell for two or three years from now -- many sellers are just not in a position to wait.

I personally have a house that I own that I moved out of two and a half years ago when I bought my condo in a different state. If I were short on cash and had a mortgage on that house, I might feel that desperation. There just isn't any real market. I don't think there has been a house sold in the area in the past year or two other than foreclosures and distressed sales. The housing prices in the area were not grossly inflated before the present economic problems, and I really expect the market to recover fully or at least substantially within a few years. From my perspective, I am better off holding onto the property, keeping it in good shape, and waiting rather than practically giving the place away. Many others just don't have that option.

I have never engaged in an auction as either a buyer or a seller. I suspect that for housing it gives a quick route to closure, but I doubt that it often results in a selling price that "a willing buyer and a willing seller will agree to when neither of them has to engage in the transaction." The exception might be banks that are indeed "willing" to sell/dump properties that they don't want on their books.

Quote: konceptum

But, I'm used to people not agreeing with me.

No harm done, I got the point. Now go get that home eq loan and buy that boat you always wanted!

Quote: dm

fair collusion

?

Quote: Doc

I'm certainly no economist. I recall some sort of definition of free-market value of an item being what a willing buyer and a willing seller will agree to when neither of them has to engage in the transaction. Unfortunately, in today's housing market, there are a whole bunch of sellers who are not really engaging in the transaction willingly. This results in a very distorted picture for market values. This is in addition to any market correction related to the artificial housing bubble that existed in many areas.

You make the point very well, the same one that I was trying to make: the auction process is NOT a "fair market", especially when the seller is not voluntarily taking part. An insidious side effect is that such auction depress fair market prices, in that they artificially lower the average sale price of properties: some buyers will choose the vulture route instead of a conventional real estate transaction.

What I can't fathom is this: the banks' professed reason for disposing of properties via quickie vulture auctions is that as long as the nonperforming loan is on the books, they can't lend that money to anyone else, because of the reserve requirement. But since they're not lending money to anybody but God these days (and even He had to sign a promissory note), what's the downside in modifying people's loans in some fashion? After all, they collected the vig a long time ago (points, origination fees). Built into the interest rates was an actuarial calculation of the likelihood of default. Rather than forcing a short sale down the homeowner's throat, a process where everybody but the auctioneer and the vultures loses, why not defer payments, modify the principal balance and/or the terms, etc. to enable the borrower to at least continue living in his home? For one thing, it would protect the collateral.

Quote: mkl654321

what's the downside in modifying people's loans in some fashion?

My layman's guess is that with an attorney behind every tree, once one mortgage is modified, they may face legal pressure to modify all similar loans. It may simply be a door they're afraid to open.

Quote: mkl654321

An "asset" does NOT only mean "something that makes money" or "something that produces wealth". There's a reason why most people don't agree with your defintion of asset: it's incorrect.

It isn't incorrect. You are right that most people do not agree with me. But if you talk to wealthy people, they do agree with me. These are people who agree that an asset is something that generates income. Everything else is not an asset if it does not generate income. History and economics have convinced people otherwise, but those books aren't written by the wealthy. I won't go as far as Robert Kiyosaki and state that a primary home is actually a liability, although there are times when I'm sure many homeowners feel that way. Perhaps it is simply better to delineate between assets and cashflowing assets. Regardless of what you want to call it, I still think it's foolish for people to be gambling with the roof over their head.

Quote: mkl654321

what's the downside in modifying people's loans in some fashion?

This is the simple concept that baffles me. It would be in the homeowner's interest as well as the bank's interest. Why they choose to not do so is beyond me. I have heard of people pursuing loan modifications that have dragged on for nearly a year.

Quote: konceptum

It isn't incorrect. You are right that most people do not agree with me. But if you talk to wealthy people, they do agree with me. These are people who agree that an asset is something that generates income. Everything else is not an asset if it does not generate income. History and economics have convinced people otherwise, but those books aren't written by the wealthy. I won't go as far as Robert Kiyosaki and state that a primary home is actually a liability, although there are times when I'm sure many homeowners feel that way. Perhaps it is simply better to delineate between assets and cashflowing assets. Regardless of what you want to call it, I still think it's foolish for people to be gambling with the roof over their head.


This is the simple concept that baffles me. It would be in the homeowner's interest as well as the bank's interest. Why they choose to not do so is beyond me. I have heard of people pursuing loan modifications that have dragged on for nearly a year.

Somehow, I doubt that ANY wealthy person would agree with you. Your definition contradicts the dictionary definition as well as the economic one. Consider a common stock that pays no dividend. Are 1000 shares of that stock therefore not an asset? If they are not an asset, what are they? A gold mine or a petroleum field is not currently being worked, and therefore generates no income at present. Does that mean that it is not an asset? For that matter, $100,000 in Krugerrands do not generate an income, but I still would consider them to be an asset.

It's not "foolish", because it's not "gambling", to turn home equity into cash: that is just exchanging one kind of asset for another of equal value. It's also a bit superior-sounding to say that some hypothetical person doesn't have a valid or rational reason for wanting the cash instead of the banked equity. I can think of a dozen good reasons why a homeowner might want to borrow against his home equity. In fact, two friends of mine did exactly that to pay for opening a successful business, and to pay for eye surgery, respectively. I wouldn't sneer at either one of those people for being "foolish".

Quote: Calder

My layman's guess is that with an attorney behind every tree, once one mortgage is modified, they may face legal pressure to modify all similar loans. It may simply be a door they're afraid to open.

Possibly. But I can't imagine any valid civil litigation that says you treated Person X this way, therefore you have to treat me the same way because I have a similar contract with you. In any case, most if not all banks have a very deep cesspool of lawyers to dredge up if they need to.

There may be a similar motivation, though: if Bank of Skeleton Gulch makes it known that they are open to loan modifications, that might be an incentive for people currently in good standing with their mortgages to enter a state of default, citing hardship, with the idea of reducing their payments or balances via modification. The antidote to that would be to only modify loans in the case of bona fide, documented hardship. But I think that banks don't want to appear "weak", so they've dug in their heels on renegotiation. Obama has begged them several times to do so, but they've turned a deaf ear. After all, they didn't get all those billion skillion trillion federal stimulus dollars to, like, LOAN them to people or anything.

Quote: mkl654321

Most homes sold in foreclosure have not been "on the market" for any longer than a brief period, and some never reach the market at all before being sold at auction. The owner won't try to sell unless all means of maintaining payments on the mortgage have been exhausted, and then the bank cannot sell until it assumes legal title. Auctioned homes have indeed often been IN FORECLOSURE for many months, but that does NOT mean that they have been for sale to the general public. In point of fact, one the bank acquires title (by lien), it moves to dispose of the property as swiftly as possible, so such a property receives little or no exposure on the open market.

The value that is lost is the difference between what the house would have sold for on the open market, and the severely discounted price that it goes for instead at auction. The seller, the former homeowner, pays not only that discount, but also auctioneer's fees, bank fees, bank penalties, etc.--and the clock doesn't stop on his mortgage, either. By the time he pays all these costs, the seller's proceeds are often a small fraction of his original mortgage balance.

My point, which seems to have gone whistling right over your head, is that the foreclosure and auction sale process hurts the buyer severely, and part of the damage done is that the home is sold for far LESS than fair market value, even considering the deteriorated condition of many such homes. If banks were forbidden to seize and quickie-sell homes with delinquent mortgages, then auctioneers, banks, and lawyers would make less money, but at least the person who has lost his home wouldn't also be saddled with a mountain of debt that was brought about by having to pay those auctioneers, banks, and lawyers, not to mention providing a juicy moneymaking opportunity for some vulture.

This is so wrong I don't even know where to start. People that can no longer afford their home do one of two things. They attempt to the responsible thing - which is to put the home on the market, and get some kind of offer, even if it less than what they owe on the home. The second thing they do, is throw up their arms and say screw it, "I can't afford, I have no equity, come take the thing". You seem to believe that the common process is some sad story of some old lady with a home with tens of thousands in equity who some evil banker comes and steals away from here. Sorry, that is not the reality.

When a homeowner stops making payments, after about 6 months a bank will file a notice of default. It varies from state to state, but what usually happens is a sherriff's sale is set by the court in another 3-4 months. This is under NORMAL circumstances, where it is 9-10 months from when a homeonwner stops paying and there is a sheriff's sale. (I'll point out, this is NOT the type of auction the OP was discussing.) The minimum bid at the auction will be the balance owes to the first mortgage holder. If no one bids more than what is owed on the house, the bank gets title to the home. At that point, the homeowner is DONE. The bank then typically lists with a real estate agent the home, known as an REO.

Short-sales - where the bank never actually takes title to the home - were once a very rare occurence. They have increased substantially in the last 2 years, but there is still so much red tape and paperwork its often too much of a headache for anyone involved. This is what the OP was talking about. The homeonwers willingly allowed an auction house to sell their home, with approval from the bank, rather than allowing a traditional foreclosure to occur. As he stated, they tried for a LONG time to sell their home in the traditional manner, dropping their asking price over $100k.

Your point about homeowners being saddled with mountains of debt is false and shows that you have no clue how things really work. In 99% of cases the banks never return to the original home owner and attempt to collect on any deficiancy. They do not get deficiancy judgements. Of course it shows on their credit report - but so the fuck what - they've got a damn foreclosure on their report. Its all going to sit there for 7 years regardless if the homeowners paid back the entire deficiancy. It dosn't shock me that you are a licensed real estate agent. In 20+ years of investing in commercial and residential real estate, I've found that agents know less about the business than just about anyone.

Quote: Calder

My layman's guess is that with an attorney behind every tree, once one mortgage is modified, they may face legal pressure to modify all similar loans. It may simply be a door they're afraid to open.

Loans aren't modified because of the securitization process. Most mortgage servicers do not have the authority to modify loans. That's why the gov't programs are jokes. Securitization has sliced mortgages up so that you could never find where your own actual loan is sitting any longer. Its all part of a big "traunche".

Quote: ruascott

Your point about homeowners being saddled with mountains of debt is false and shows that you have no clue how things really work. In 99% of cases the banks never return to the original home owner and attempt to collect on any deficiancy. They do not get deficiancy judgements. Of course it shows on their credit report - but so the fuck what - they've got a damn foreclosure on their report. Its all going to sit there for 7 years regardless if the homeowners paid back the entire deficiancy. It dosn't shock me that you are a licensed real estate agent. In 20+ years of investing in commercial and residential real estate, I've found that agents know less about the business than just about anyone.

Please don't be so arrogant as to equate my disagreeing with you as "you have no clue". You're obviously on the side of big business, probably because that's where you make your living, so you may turn a blind eye to the excesses and unfair/unethical practices of businesses. You also are an investor, so you no doubt tell yourself that you know everything--otherwise why would you invest??

Funny thing about the way you argue--I contradict your assertion that I know nothing about the business, and then when I show you how stupidly wrong you were about THAT, you try to twist it around with the equally stupid assertion that licensed realtors not only don't know about the real estate business, they know LESS than "just about anyone"; I guess a fry cook or a stripper would know more, by your logic. You have thus wandered so far out of the realm of reason that talking to you is pointless. Your ideology and your ego are obviously so dominant that you can't engage in a rational discussion. Which is too bad, because beneath all the bloviating and bluster, it seems that you DO know something about the subject (unlike you, I'm not going to try to craft a stupid and weak insult by saying something like, "In fifteen years in real estate, I've found that real estate investors know less than the business than just about anyone.").

On a side note, a friend of mine is the manager of a local Lowe's, and he's says they're doing great. People can't sell their homes so they're fixing them up themselves. They can't afford a contractor to install the new kitchen, so they come to a home improvement store and learn how its done and buy what they need. My question is, doesn't this make Lowe's and Home Depot 'vultures'? In MLK's twisted world, shouldn't they be giving the stuff away instead of taking advantage of people who can't move?

Quote: EvenBob

On a side note, a friend of mine is the manager of a local Lowe's, and he's says they're doing great. People can't sell their homes so they're fixing them up themselves. They can't afford a contractor to install the new kitchen, so they come to a home improvement store and learn how its done and buy what they need. My question is, doesn't this make Lowe's and Home Depot 'vultures'? In MLK's twisted world, shouldn't they be giving the stuff away instead of taking advantage of people who can't move?

You and I inhabit the same world, Bob buddy, so if my world is "twisted", yours is too.

Your argument and rhetorical question are so stupid (and so typical), that I won't bother to answer them except to point out gently--as I would to a child--the excellent explanation in Doc's post about the difference between voluntary and involuntary transactions---a purchase at Home Depot is made voluntarily, whereas a sale of a foreclosed home is not.

Quote: mkl654321

whereas a sale of a foreclosed home is not.

If a somebody decides to sell their property at auction months before its forclosed on, as I outlined in the first post in this thread, it most certainly is voluntary. You said the auctioneer was a 'vulture' for charging them what he charges everybody else, making both seller and buyer pay a percentage. This is common practice in MOST auction sales now, the buyer has to pay 'buyers premium' and the seller is charged a fee. Auction houses like Sotheby's has been doing this for decades. By your twisted logic, people who come to Lowe's in distress over not being able to sell their home and want to fix it up, are being taken advantage of by the vultures for not dropping their prices or giving the stuff for free. Right?