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The Great Real Estate Swindle All things related to the housing debacle including sub-prime lending practices, foreclosure fraud, MERS, REMICS and banking and political malfeasance.

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Old 03-30-2015, 01:10 PM   #1
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Default Broke? You May Now Be Entitled To a Free Home

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It’s been seven years since the epic collapse of the US housing market, and there’s never been a better time to buy your first home. In Denmark for instance, the bank will tax depositors in order to pay you to take out a home loan. But before you move to a European country operating in NIRP-dom, consider Florida and New Jersey first because as Susan Rudolfi recently discovered, you can actually get a house for free by simply not making your mortgage payments. Here’s more via NY Times:


She is like a ghost of the housing market’s painful past, one of thousands of Americans who have skipped years of mortgage payments and are still living in their homes.

Now a legal quirk could bring a surreal ending to her foreclosure case and many others around the country: They may get to keep their homes without ever having to pay another dime.

The reason, lawyers for homeowners argue, is that the cases have dragged on too long.

There are tens of thousands of homeowners who have missed more than five years of mortgage payments, many of them clustered in states like Florida, New Jersey and New York, where lenders must get judges to sign off on foreclosures.

However, in a growing number of foreclosure cases filed when home prices collapsed during the financial crisis, lenders may never be able to seize the homes because the state statutes of limitations have been exceeded, according to interviews with housing lawyers and a review of state and federal court decisions.

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Old 03-30-2015, 01:22 PM   #2
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The new American Dream.
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Old 03-30-2015, 03:39 PM   #3
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Seems we like to incentivize bad behavior and poor decisions on many fronts these days. Sometimes I wonder why I bother with doing things the right way.
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Old 03-30-2015, 04:14 PM   #4
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I'm afraid it isn't anything NEW.

Almost thirty years ago my parents lent my brother money to buy a house in NY state. They didn't just give him money, they set up a mortgage and payment plan through their attorney and bank. It was all quite legal and properly filed. To make a long story short, he jerked them around and didn't pay for five years and when they got fed up and tried to foreclose, found out they had given their son a free house.
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Old 03-30-2015, 05:02 PM   #5
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A good friend of mine tried to make up payments on her house, they foreclosed, and then sold her account around repeatedly to different companies, who pulled the same kind of stuff done to this lady. It went on for a couple of years with her writing to congresscritters, trying to find a way to work with someone, but they always lost the paperwork she sent in, always delayed the process, always sold it to a new company so she had to start over....and finally she said: Fuck it. And walked away.

She had a mother entering dementia, and other kinds of life problems and just was sick to death of the whole situation screwing her and screwing her.

Don't judge the people who figure out how to make this screwed up system work for them. They are the smart ones. The poor ones who have many problems and still have good intentions are the ones who are stomped on.
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Old 03-30-2015, 08:08 PM   #6
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Don't judge the people who figure out how to make this screwed up system work for them. They are the smart ones. The poor ones who have many problems and still have good intentions are the ones who are stomped on.
Obviously, my sentiment doesn't apply to everyone who benefits from the statute of limitations. At the same time, I heard more than a few folks back in 2006 saying stuff like, "If the market crashes and I can't repay the debt, everyone else will be in the same boat too. So, the banks will have just to write down the loan, forgive the debt, etc." It's that kind of thinking that is the problem.

The money involved doesn't come without a cost. Either it is from the Fed, in which case there will eventually be inflation, which is a stealth tax on everyone. Or it is from bank reserves in which case depositers' funds were used to fund the loan.
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Old 03-30-2015, 08:47 PM   #7
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Hard to feel sympathetic for a bank that lets a mortgagee go without making a payment for five YEARS. Looks like a failure of fiduciary duty to me.
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Old 03-31-2015, 12:22 PM   #8
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ATH - not sure of the exact process, but then neither are the banks, but there was a scam running during the height of this mess where the banks refused to accept payments in order to deliberately push homes into foreclosure. Banks also told underwater mortgage holders who were attempting to restructure their mortgage to not make any payments while the mortgage was being restructured. Six months later, the homeowner gets a letter stating that the restructuring has been denied and the homeowner must immediately come up with the six back payments as well as a "late" fee or the house will immediately go into foreclosure.

How do I know this? It happened to both my brother and sister. I'm not defending them, they both got in over their heads with continuous borrowing against the equity in their houses. When the bubble burst here in California they were left owing 2-3 times what their houses were worth and due to a serious slump in the economy, their jobs dried up and they were both left with difficulties in making their house payments. They both got to keep their homes by filing for bankruptcy although I don't know the details or how much of the loans were forgiven, but they did both get some sort of restructuring through the bankruptcy process. Meanwhile, dh and I and most of our friends, continued to live in our homes and make our payments. In fact, a huge chunk of our current home we had paid off with the sell of another property when we initially bought it. But the banks weren't beating down our door to refund us the $230,000 we were "out" when the market crashed LOL.

Real estate is a gamble at best and the buyer needs to always understand what they're getting into, NO EXCEPTIONS. However, ten years ago, there was a feeding frenzy in the mortgage market and a lot of gullible people were sucked into commitments they didn't fully understand and ones that loan officers couldn't fully explain. For example, we needed a short term loan until a property sold. We were given a loan that we didn't qualify for but the mortgage company told us to leave the income line blank and that they would "fix" it. Dh who is a stickler for detail tried to get four different loan officers to explain the terms of our loan, no one could. I thought dh was going to get an ulcer until the loan was paid off. Which it was, six weeks later. Of course by then, our original lender had already sold our ridiculously huge mortgage. It was such a mess and I actually felt like we were being pursued by rabid used-car-salesman-mortgage-brokers. But we were fortunate and had a plan and it worked, despite taking a rather hefty hit to our home value for eight years. It didn't affect us because we weren't moving. Like I said, we were lucky and refused to allow the banking industry to sell us "products" we didn't need or want.

Many were not so lucky and were pursued by "banksters" and left with loan packages they had no hope of ever paying off. But the banks didn't care, the mortgage was flipped over and over and then the bank left holding the short straw - the holder of the bubble popped mortgage- could play games with the homeowner, milk them for all they could, and then still foreclose. But, as you can see from the original post, it ended up biting some of them in the ass. They were left with such a huge inventory that they became backlogged. It's all a huge mess and there were scammers and opportunists on both teams.

(Typed on an auto correcting kindle )
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Old 08-23-2015, 03:17 AM   #9
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A bank does not have to have money to make a loan. The note that the borrower signs -- that is money. The bank puts up nothing, which according to common law is an invalid transaction, and the borrower is committed to paying for his house three times over. To add insult to that, the ease of getting bank financing drives prices up. Sellers know exactly how much financing is available and that is exactly what houses cost. The high prices then force buyers to take loans instead of borrowing from relatives like they used to do before FHA. So I have no sympathy for bankers, and I think it's wonderful that a bunch of people get free houses.
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Old 08-23-2015, 07:17 AM   #10
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A bank does not have to have money to make a loan. The note that the borrower signs -- that is money. The bank puts up nothing, which according to common law is an invalid transaction, and the borrower is committed to paying for his house three times over.
Sort of. The borrower doesn't have the money to pay for the mortgage, but that money had to come from somewhere in order for the current owner of the home to be paid. The mortgage is a promise of payment, but the funds came from assets the bank holds.


Reserve Requirements

All depository institutions -- commercial banks and thrifts -- in the United States are subject to reserve requirements on customer deposits. The required reserve ratio depends on the amount of checkable deposits a bank holds. No reserves are required on the first $12.4 million. Between $12.4 million and $79.5 million, deposits are subject to a 3% reserve. Above $79.5 million they are subject to a 10% reserve. These breakpoints are effective year-end 2012, and are adjusted annually in accordance with money supply growth. No reserves are required against time deposits or savings accounts.


A 10% reserve rate would create $1000 from the initial deposit of $100.
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