in 2010. Only about 2,500 per day were foreclosed on in 2009.

Home Foreclosures Top 1 Million for First Time in 2010 (http://www.cnbc.com/id/41052882)

I really don't understand all of those foreclosures or the concept behind them. My ASSumption is that banks don't really want to own a bunch of houses because they can't readily resell them and have no real use for them.

So for primary residence houses, why wouldn't they try to work with the homeowner? Defer payments, reduce interest rates, that sort of thing? Not for investment properties, obviously, but it makes no sense that a bank would *want* to repossess all these houses.

Or am I just being stupid and there's something else?

I really don't understand all of those foreclosures or the concept behind them. My ASSumption is that banks don't really want to own a bunch of houses because they can't readily resell them and have no real use for them.

So for primary residence houses, why wouldn't they try to work with the homeowner? Defer payments, reduce interest rates, that sort of thing? Not for investment properties, obviously, but it makes no sense that a bank would *want* to repossess all these houses.

Or am I just being stupid and there's something else?

I think there are a lot of factors in play, but you're right to some degree and the banks have been willing to do things to not have to foreclose, such as accepting short sells (and, essentially writing off a large chunk of principal). I have a friend who had his bank offer to accept a huge reduction from what was owed as a full payoff on his mortgage, if he could find another bank to give him a new mortgage for enough to pay that reduced amount. They just wanted to take the hit and be done with it. That's one reason for wanting to foreclose or accept short sells - so that the bank can take the hit to its books (that has already occured in reality) and be done with the problem, rather than having it linger and plague them for 10 years.

When it comes to refinancing loans at a lower rate, or deferring payment - one of the problems is that some homeowners still wouldn't be interested in paying on the homes anymore. They paid way too much for their homes, and now that their homes' values have adjusted to closer to reality, they realize that they're $50K or $150K upside down. Why keep paying on a $400,000 mortgage for a home that's only worth $275,000, even if the bank is willing to structure the loan so that you can afford to do so? Doing that, rather than walking away and leaving the bank with the problem, is like giving away $125,000 - it's like overpaying for the home again. Of course, the reason one would do it is because it is what they agreed to do - because they obligated themselves. But, a lot of people are okay with disregarding that obligation, even if they could meet it. I suppose some feel they were victimized by the banks to begin with, so they can justify, in their own minds, screwing the banks over. Just letting the homes go - and not making any additional payments - means a new start, free of the negative equity weight around their necks. Whereas, choosing to keep trying to pay the mortgage means spending the next 10 years trying to climb out of the whole they put themselves in.

That's to say nothing of the people that might be willing to keep paying on their homes if they could get interest relief or deferred payments for a while, but just can't afford to for whatever reason.

I really don't understand all of those foreclosures or the concept behind them. My ASSumption is that banks don't really want to own a bunch of houses because they can't readily resell them and have no real use for them.
So for primary residence houses, why wouldn't they try to work with the homeowner? Defer payments, reduce interest rates, that sort of thing? Not for investment properties, obviously, but it makes no sense that a bank would *want* to repossess all these houses.

Or am I just being stupid and there's something else?

A possible answer to your first question: They can re-sell them.

It MAY depend on the area or the bank. Wells Fargo is one of the one's that is really good at that kinda s*!t.

Your 'primary residence' question:
They don't care. They tell you they don't want to foreclose; or they are willing to "work with you"; but they can just as easily put your house on the block at a foreclosure sale just to get somebody to pay them money.

The buyer at the foreclosure sale makes out like a thief; able to get the place; basically for pennies on the dollar.

Wells Fargo will sooner sell your house from under you than work with you. They SAY they are willing to; but it's just lip service. JMHO

I suppose some feel they were victimized by the banks to begin with, so they can justify, in their own minds, screwing the banks over.

Well, not much of a stretch to feel justified in screwing a bank over, after the taxpayer bailouts they just got and the stories of frivolous spending they engaged in afterward.

So you've given me a different perspective. We automatically feel sorry for anyone who's lost their home to foreclosure, but maybe many of them did it on purpose. Maybe the bank did try to work with them and keep them making those payments, and the homeowner said, "Nah. You go ahead and keep the house I'm indebted to for $400,000 that is now only worth $275,000. Hope you enjoyed the party you had with your bailout money!"

Well, not much of a stretch to feel justified in screwing a bank over, after the taxpayer bailouts they just got and the stories of frivolous spending they engaged in afterward.

So you've given me a different perspective. We automatically feel sorry for anyone who's lost their home to foreclosure, but maybe many of them did it on purpose. Maybe the bank did try to work with them and keep them making those payments, and the homeowner said, "Nah. You go ahead and keep the house I'm indebted to for $400,000 that is now only worth $275,000. Hope you enjoyed the party you had with your bailout money!"

Yeah, there are myriad situations out there, and plenty of fault to spread around. But, as a general proposition, banks would prefer not to foreclose - there are reasons not to want to, not the least of which is the liability of owning vacate houses for an indefinite period of time. In most cases, they'd be better served letting the owner do a short sell and having the owner do the work of finding a buyer, or allowing the owner to secure new financing for the home, even if it means a reduced pay off for the original bank.

Another thing to consider is that so many of these homes (i.e. the mortgages for them) are held in trusts where pieces of the ownership of those trusts have been sold to countless entities and people. Someone - e.g. some bank - is the trustee for each of those trusts, and as the trustee they have a fiduciary responsibility to the various owners of the trust to make the best out the situation financially. That might mean that they need to foreclose and cut their losses - or limit them - even if they wouldn't make the same decisions if they themselves were the ones who owned the mortgages.

Well, not much of a stretch to feel justified in screwing a bank over, after the taxpayer bailouts they just got and the stories of frivolous spending they engaged in afterward."

To show gratitude, they 'bend some folks over the rail.'
Nice huh?

The thing is.....they could give two ***t's about foreclosing on somebody who might simply be having financial trouble; and ruining their credit; not to mention leaving them with the immediate burden of having to find a place to live.

Lots of people are walking away on purpose. They don't TRY to work with the bank..they just don't want to pay anymore. The seller of our home got a divorce, and then he and new gf bought another home...they decided to stop paying the mortgage on the home we bought..and nearly derailed our sale as it started the foreclosure process.

And some homeowners defiantly do not pay their mortgage on their rental property, even with the tenants of said rental property pay their monthly rent payments in a timely and reliable factor.

And THEN, the renters come home on a beautiful Friday evening to find a Notice of Foreclosure in the mail, with the advice that you (the renter) needs to be aware of a possible eviction process if the back mortgage isn't paid in full.

And THEN, when the bank holding the mortgage on the house do finally get up off their assess to sell the property, then considerably boost the sales price of the home so that they can recover the costs of not having received a mortgage payment in seven months, and they also tack on the costs on bringing in Foreclosure Attorneys.

Yeah, don't even get me started. :burning:

Well, not much of a stretch to feel justified in screwing a bank over, after the taxpayer bailouts they just got and the stories of frivolous spending they engaged in afterward.

So you've given me a different perspective. We automatically feel sorry for anyone who's lost their home to foreclosure, but maybe many of them did it on purpose. Maybe the bank did try to work with them and keep them making those payments, and the homeowner said, "Nah. You go ahead and keep the house I'm indebted to for $400,000 that is now only worth $275,000. Hope you enjoyed the party you had with your bailout money!"

Maybe some of those foreclosed folks took bad advice from stupid people running Internet forums that make their money off real estate agents?

http://forums.somd.com/consumer-financial-affairs/115973-dear-folks-who-wish-you-owned-your-own-home.html

:killingme

All the rules have changed in the last couple of months. Lending banks are now being held accountable for the trap they set, borrowing money they didn't themselves have, while using loose and illegal practices in the process. The massive lawsuit against Wells Fargo / Wachovia, Indymac / OneWest bank, Citibank, Bank of America, JP Morgan Chase, GMAC..............can actually, not only put a stop to your foreclosure, but also pause your house payments with no loss to you............
https://sites.google.com/site/sueyourlendernow/
:coffee:

So for primary residence houses, why wouldn't they try to work with the homeowner? Defer payments, reduce interest rates, that sort of thing? Not for investment properties, obviously, but it makes no sense that a bank would *want* to repossess all these houses.


We tried for over TWO YEARS to refinance with our current lender, and they told us no each time. We were never behind in payments, never missed one, etc. Had we been in default, every program out there would have been available to us. In the end we decided to keep the house, rent it, and build our upgrade home. :smile: