Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

39 responses to “One in Five Pending Sales Failed to Close in Q4”

  1. ARDELL

    Would love to see a list of these homes that failed to close. Unless they are “Sale Fail Release” status it is hard to identify them. Where do you get the stats from for Pending and did not close?

    The ones I can identify are short sales. Any way to break out how many of the total are short sales?

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  2. Chris Harrison

    Interesting stat. I’d be curious to find out why. In New Mexico we saw more closed sales than pending sales in December 2013.

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  3. Kary L. Krismer

    If you’re using the pending data that includes Pending Inspection, I would suspect it’s mainly inspection items.

    Also, while it’s true that there are fewer short sales sales closing, the active short sales (King County SRF) are almost 10% of the inventory, and there is still roughly a 6 month supply of short sales in some sort of pending status. The reason for the falling short sales isn’t a lack of supply, it’s that the banks still are not devoting sufficient resources to process the existing inventory. I have no idea what the churn is in that pending number, but I doubt that many buyers are waiting around six months for the bank to decide.

    Nunbers from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

    Ardell–I think Tim is just going from the excess of pendings over closed.

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  4. softwarengineer

    RE: Kary L. Krismer @ 3

    Yes Kary

    Lord Only Knows. Here’s another possible reason? As the Seattle home owners [lots of Baby Boomers BTW] age, many are Reverse Mortgaging. This means more “inspection details” to be compliant to or the contract can be null and void. Reverse Mortgage inspection contract requirements are far harsher IMO to keep the house more sellable by the lender in the future. But are these likely “over-blown” inspection requirements made null and void when the title holder wants to sell? Reducing pending sales failures when the new owner wants to sell?

    Just a thought, no data to back up this allegation.

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  5. sam

    It would be good to see more data on whether the short sales are responsible for skew. But I find it difficult to believe that there were either very few short sales in Q2,Q3 or banks were just dragging their feet on short sales in Q4.

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  6. Kary L. Krismer

    RE: sam @ 5 – You’re right more data is needed, and the sales data is only part of it, but I cannot pull up at this point for historical data on the total pendings. But each time I checked during the year there was roughly a six month supply of pending based on the prior month sales.

    As to sold short sales, in the last 3 months of 2012 there were about 725 short sales closed (King County, SFR). Only about 550 closed in the first three months of 2103. About 650 in the second quarter. About 450 in the third. And less than 350 in the last three months of 2013. So clearly declining numbers. I suspect that was primarily due to rising prices, and banks turning down a lot of offers.

    Add in the fact that in the early part of 2013 the low inventory was getting a lot of people to buy short sales, just so they could have an accepted offer on something.

    Same disclaimer as prior post regarding NWMLS data.

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  7. ARDELL

    RE: Kary L. Krismer @ 3

    The short sales I see not closing up here are mainly higher end homes where the seller doesn’t qualify for forgiveness. Watching one that fell apart twice and will end up in foreclosure so that the seller can get forgiveness under WA Statute. One lender; one loan. Two agents had it listed back to back and it was in escrow twice and failed twice. Now it is off market. Saw several others in the 2nd half of last year have the same issue. Not everyone qualifies for a short sale or for forgiveness on the difference.

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  8. mike

    RE: ARDELL @ 7 – Are there really that many people living in high end homes that have no ability to pay their mortgage and lack sufficient assets to ‘bring a check to the table’ at closing? It seems like most of those folks would have been able or forced to exit at some point prior. The crash happened 7 years ago!

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  9. ARDELL

    RE: mike @ 8

    There are many agents who are listing short sales for people who have the means to bring a check to the table and who have already bought a different home they are living in.

    Many of those have also been paying the mortgage on both homes for a very long time. The rent they are getting for the house they left is not totally covering the mortgage payment, and in some cases not nearly covering the mortgage payment. They are tired of making up the difference between the rent and the mortgage payment and they don’t want to bring a check to closing either. I have met many people like this, but have not listed their homes.

    I had a couple of meetings with a youngish couple over the last few years who are short about $50,000 and have about $140,000 in savings. They also can sell their home for more than they paid for it, but they rolled both of their car loans and both of their student loans into their mortgage at peak. They want to live somewhere else. Well actually she wants to live somewhere else without him and he can’t afford to stay. They don’t want to take $50,000 from their savings to bring to closing even though that $50,000 represents the car and student loan payoff that was rolled into the mortgage.

    This is what we as agents see and hear all the time. The bank is not going to roll over and say “ok” to something like that. But some agent will list that house. Some buyer or a couple of buyers in succession will sit in escrow waiting for the answer. I guess once in a while a bank says “ok” or so many wouldn’t be trying it. Most of the time the bank says no after 2 or 3 months. Sometimes a different agent comes in and convinces the seller they can do it…and then a 2nd buyer gets stuck in escrow only to wait for another no answer from the lienholder. If they let it go to foreclosure and there is only one lender and one loan, I’m pretty sure they do get forgiven. They just can’t sell short.

    Kary, being a bankruptcy attorney, would know better than I if a cash-out refi of one all inclusive new mortgage for the total rolling in the cars and student loans, qualifies for forgiveness if they just let it go to foreclosure. I know they do if the loan is the original purchase loan. So far I tell them what I think of all that and then tell them to talk to a lawyer and the lawyers have not disagreed with me.

    A lot of people think they should list it short…because they owe more than they can sell the house for and don’t want to pay the difference. They have equity in a new home they are living in and they have cash in the bank. Most of the time if they let it go to foreclosure they can be forgiven. But lots of agents knock on those people’s doors and want to list the house…and they do…and the pendings fail and sometimes 2 or 3 times…and then it comes back as a bank owned home and sells.

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  10. Azucar

    RE: ARDELL @ 9

    IMO, there needs to be more consequences for foreclosure or a short sale. People shop around and find a house. They agree at the time to pay the sale price. They get a loan and buy the house. When the market was constantly climbing, they profited handsomely when they went to sell the house, and considered the extra money they received from the sale to be theirs (which I agree… it rightfully is theirs). However, to obtain the benefit of potentially reaping the profit from a sale in a rising market, IMO they also assumed the risk that the market might go down. It chaps my hide to see people who can still afford to make the payments on that house be able to walk away from it and have no serious consequences (i.e. get forgiven the amount of deficiency in a foreclosure or short sale). IMO lenders should pursue the outstanding amount to the maximum extent possible, especially if people have assets that can be sued to seize.

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  11. Blurtman

    RE: Azucar @ 10 – C’mon. Tishman Speyer walks away from $4 billion on RE loans, and suffers no consequences. Businesses renegotiate loans all the time. Why the double standard?

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  12. Erik

    The answer is simple. People get lazy in the winter time. People don’t really want to work, so real estate agents and loan service people drop the ball more often. Details get overlooked and sales do not close. A good agent watches the sale all the way to the closing date the same way a mother hen raises her young. I will describe to you how a real estate agent is very similar to a chicken.

    First the mother hen lays on the eggs to keep her eggs warm just as the agent prepares the home for a sale. Next, her young begin to hatch just as an agent brings in offers. Then after the eggs have hatched, mother begins to feed and groom her little hatchlings the same way that an agent talks to all the buyers to choose the healthiest buyer with the highest offer. Finally mother boots the chicks out of the nest the same way a real estate agent closes a sale. If mother didn’t do her work to raise her chicks, the chicks will not survive just as a housing sale will fall through without work being done to guide the sale.

    You see in the winter time mother hens don’t hatch eggs just as most agents are not programmed to buy and sell in the winter, so many agents won’t provide the best service during those times. Agents get lazy and start drinking and watching tv when they should be guiding the sale. Of course there are exceptions to this phenomenon if you are lucky enough to find a good agent as I did.

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  13. Erik

    RE: Azucar @ 10
    Those are not the rules sugar. Just because that is your moral code doesn’t make it the rules. The rules are that the people that foreclose get rewarded.

    People get worked up and angry when the law does not coincide with the moral code their parents taught them. You would be less angry if you played by the rules as opposed to constantly attempting to overriding the laws with your personal moral code you created. I have seen this a lot on here and it is insanity in my opinion. The rules are the rules. Play by them and your life will be easier and you won’t get so frustrated about people getting more than you. They just played smarter than you.

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  14. ARDELL

    RE: Azucar @ 10

    Acuzar,

    This answer will be long, but I do hope you will read it and respond. It is very important to me that someone else “gets” this because sometimes I think only people who have lived on the East Coast understand what is really happening around here.

    On the East Coast when you take out a 30 year mortgage it is understood that you might lose your job temporarily at some point before that 30 years is up…or become ill and out of work for some period of time. Or if you are a farmer that you might have a bad crop from time to time. The East Coast has “Judicial Foreclosures” called Sheriff Sales. The market has crashed as badly there (notably back in 1989 or so) without as severe consequence. While there is normally no automatic forgiveness, there is a process that provides for the normal course of someone’s 30 year employment and breaks in that employment. With a Judicial Foreclosure the lienholder normally cannot begin foreclosure proceedings for at least a year and sometimes two years. This gives someone who loses a job or has a prolonged illness time to get another job or recover from their illness and go back to work.

    Let’s say someone is out of work for 9 months and runs out of funds to pay the mortgage after 3 months. That puts them six months behind in their payments BUT they can resume their payments when they get a new job or return to work after an illness without losing their house. The six months in back payments with penalties and interest gets added to the end of the loan. The bank loses nothing in the long run. The people do not lose their homes. The mortgage simply becomes a 30.5 year mortgage and the extra amount due is added to the principal. This is called a “forbearance”. Sometimes, depending on the situation, the forbearance requires the borrower to make up the owed amount in a shorter time and not added to the end.

    This process has no forgiveness and gives people ample time to lose their job once or twice in a 30 year period and get a new job without losing their homes.

    I moved to the West Coast back in 1998 or so and took the classes needed to convert an East Coast real estate license to a West Coast license. The teacher explained that the minute someone is one day late on their fourth payment the foreclosure process is started. Basically that is 90 days behind. Well 91 days. That sounded crazy to me. The teacher explained that every home buyer in escrow states on the West Coast signs a Deed of Trust when they buy a house that accelerates the foreclosure process automatically. Since the foreclosure process starts so quickly, there is no expectation that someone who loses their job won’t lose their house. There is no decent structure for a normal home buyer to get through 30 years of life with the mortgage recognizing the ups and downs that life can bring. Crazy really when you think about it, given these are some of the same lenders on the East Coast who fully understand the cycle of life’s employment for most people and DO offer their East Coast borrowers more advantage in that regard.

    I asked the teacher WHY in God’s name would anyone sign a Deed of Trust allowing the lienholder to automatically start the taking of their home so soon? Clearly many people can get another job withing 6 months to a year…but they start losing their house in 90 freakin’ days! Why would anyone agree to that when they buy a house?

    The teachers answer…FORGIVENESS. The lenders in escrow states (vs a settlement closing) who use Trustee Sales (vs Sheriff Sales) want to rush in and take your house FAST. In exchange for that speedy and automated process, they promise the homebuyer/borrower that whatever they get at that speedy “foreclosure” via a Trustee Sale is what they agree to walk off with and not come back for the difference.

    The lenders trade speedy process for the ability to collect the shortfall. They do that up front every time a home is sold with an accompanying Deed of Trust vs a true “mortgage” that requires a Judicial Foreclosure that gives the home owner time to lose a job and get a new one and resume and catch up on their payments.

    So whether it is a Trustee Sale or a Short Sale is really not why there is forgiveness in the room. It is because the lenders traded Speedy Take Your House for a more decent system of collection in exchange for that forgiveness. In fact buyers of homes have no choice in the matter as you can’t seem to buy a house without agreeing to the Sped Up Process of taking people’s homes by signing a Deed of Trust on the West Coast.

    So the home buyers are stuck with forgiveness in exchange for quickened process to take their home whether they want that or not. So don’t go feeling all sorry for the banks on this. They made their beds…and they need to lie in them. :) They are the ones who wanted the ability to swoop in early and take the houses. They don’t always act as quickly as they can…but the homeowner has no control of that. The chips are all on the side of the banker at that table and they traded forgiveness for that right to speedy taking.

    No fair for them to want both an accelerated process and no forgiveness when they twisted the borrowers arm on day one to the mat and said you must let us take your house faster than East Coast…and we will forgive the shortfall in exchange.

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  15. Azucar

    RE: ARDELL @ 14

    That trade-off I can almost see… but I don’t think that they are required to forgive the remaining shortfall during a short sale or foreclosure (unless the person declares bankruptcy), but I think they still do. Correct me if I’m wrong, but don’t the banks still have the right to go after the deficiency amount from a short seller (but usually waive it in exchange for the seller vacating voluntarily)? I think they should be making more of an effort to pursue everything they can under the law.

    RE: Erik @ 13

    I am aware that what you describe is the situation and what is allowed under the “rules”. That is why I started my post with “IMO, there needs to be…”

    As you note, the current situation rewards bad behavior. I’m no psychiatrist, but rewarding the bad behavior actually encourages it and causes more of it to happen. If the banks were to put more effort into going after the deficiencies instead of just “forgiving” them, people would be less inclined to think “hey, I can either pay $40k to make up the shortfall and sell this house OR I can just stop making payments on it, let it go to ruins, and then have the bank give up on me and then forgive the additional amount I owe”. Not only would the banks probably recover more money from the people that they foreclose/short sale, they would also have people making more of an effort to actually continue to make the payments that they said (implied?) they would when they signed the loan.

    And… living by a moral code instead of “getting what you can within the limit of the law” is something called “integrity”. You should read about it some time and see what it’s all about.

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  16. softwarengineer

    RE: ARDELL @ 7

    Yes Ardell

    If you’re a federal employee, 10s of thousands of Seattle area workers are: do a short sale and likely get fired from your job….its kind of like legalizing pot…the State law says its OK, but companies and government agencies still do urine analysis [essentially pot detection only, the other legal drugs disappear from your urine in 24 hrs; pot stays in your fat cells for weeks] to hold a decent job and yes, I already heard of ‘em getting fired for positive urine testing for pot in Colorado [Dish TV workers]..

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  17. Erik

    RE: Azucar @ 15
    I short sold, and I would do it again. I feel I have integrity because I followed the rules. If you feel there is something more to it, you should start writing the laws based on your moral code. I will follow them.

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  18. Kary L. Krismer

    By mike @ 8:

    RE: ARDELL @ 7 – Are there really that many people living in high end homes that have no ability to pay their mortgage and lack sufficient assets to ‘bring a check to the table’ at closing? It seems like most of those folks would have been able or forced to exit at some point prior. The crash happened 7 years ago!

    Yes it happens, and some of those are short sale fraud. I ran into one last year on a lower end property where I strongly suspect significant assets were not disclosed, something I only discovered after our deal flipped on inspection.

    The blog site I use on Trulia has been down for a while, so I haven’t posted the piece on this yet, but people buying high end homes in Seattle seem to be borrowing more now than back when the market really sucked for sellers. I’m not sure when the changeover occurred, but there are a lot of high end homes with lots of debt against them. And the ones from before 2008 that couldn’t refinance are likely still paying a ton of interest.

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  19. ARDELL

    RE: Azucar @ 15

    Acuzar said: “Correct me if I’m wrong, but don’t the banks still have the right to go after the deficiency amount from a short seller (but usually waive it in exchange for the seller vacating voluntarily)? I think they should be making more of an effort to pursue everything they can under the law.”

    First a few terms:

    1. Short Sale = Pre-foreclosure

    2. Non-Judicial Foreclosure = Trustee Sale (speedy, less costly for lender process via Deed of Trust signed at time of purchase) comes with forgiveness

    3. Judicial Foreclosure = Sheriff Sale (Longer and more costly process for lender) does not come with forgiveness

    4. Bank Owned Sale = Post-Foreclosure

    When you see pendings fail on short sales, often it is because the seller would be better off letting it go to Trustee Sale vs doing a Short Sale and does not find that out until the Short Sale “approval” letter does not grant the same forgiveness the seller would automatically get at Trustee Sale. Many owners would be better off letting it go all the way to Trustee Sale, but of course if the seller elects 1. vs 2. (they have no legal right to 3. on the West Coast) they do not automatically get the same benefits as 2. Key word being “automatically”. They have to negotiate forgiveness with their lender whereas if they simply let the process play out they would automatically have forgiveness because of the automatic speedy taking process. That speedy process is in play for a short sale BUT the forgiveness is not automatic unless it goes all the way to Trustee Sale.

    The lender doesn’t have the right to pursue deficiency unless the lender opts for the longer and more costly Judicial Foreclosure at 3 vs 2 and does not invoke their rights under the Deed of Trust. Technically the lienholder has the right to waive their rights under the Deed of Trust and not do a sped up Trustee Sale…but in reality since it is really never done on the West Coast but always done on the East Coast, the process doesn’t lean in that direction.

    Now follow the money. AGENTS do not get PAID anything if the house goes to Trustee Sale vs being sold SHORT. That is why agents often pursue distressed home owners to convince them to list as a short sale, even though Trustee Sale may be and often is the better option for that owner because of the forgiveness and lengthened stay in their home. Agents have a lot more incentive for a house to be sold short than the owner of the home or the lienholder do. That is why so many agents are willing to gamble that the short sale will be approved, and get irate if the lienholder says no. But in actuality the ones who have the most to gain in a short sale are the agents.

    So yes…if you want lenders to make “more of an effort to pursue everything they can under the law.” then you are saying you want them to shift to Judicial Foreclosure vs Trustee Sale. But that is never the case because every buyer signs a Deed of Trust when they buy a house on the West Coast. Every closing involves a Deed of Trust and the buyer and lender really don’t question that at time of purchase because it is “common practice”.

    There was some talk of making the process more uniform nationally so that you don’t have this disparity between Settlement States and Escrow States, especially now that more of the lenders are national vs local State banks. That is why a lot of this downturn has caused so many more problems and is part of the unravelling of the Glass Steagall Act that was put in place after the 1929 crash to prevent all this from happening, but was discharged in the early 90s.

    There is of course much more to the chaos of this “credit crisis” including the banks’ descision to be self insured via higher interest rates from borrowers instead of having PMI (private mortgage insurance) on the loans. There is a lot to this…but it all was implemented in advance at the time of the borrowings based solely on the lenders’ greed…and it backfired on them.

    I am not a hate the banks person and loyally worked for a bank for 20 years before my 24 years in real estate. But they made their bed and they must lie in it. They put the process in motion that left them choosing forgiveness and no insurance for the deficiency. The lenders chose all this by changing the process…not the borrowers. They thought it would work in their favor…it didn’t. They chose all this because they thought they would make more money this way and faster. In some cases they did get more money via higher rates to the borrower in exchange for no insurance on the deficiency for the bank.

    The banks took the extra interest money from the borrower and did not buy insurance with it…they lost on that gamble and that was not the borrowers’ doing nor did it advantage the borrower to go that route. In fact since they didn’t earmark the extra interest so we don’t know if that extra interest did or did not pay for the collective deficiencies. They took the extra interest and gave themselves bonuses with it. A lot of the deficiency was paid in advance via higher rates for higher risk…but you never see the net answer to the experiment. They did what most people do when they take extra money for x…they spent it on y and forgot why they had it in the first place.

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  20. Kim SJ

    Not sure if you saw Harney this week? The Consumer Finance Protection Bureau is asking the same question – why so many failed closings? http://seattletimes.com/html/businesstechnology/2022611450_bizharney12xml.html?prmid=4917

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  21. Kary L. Krismer

    RE: ARDELL @ 19 – To continue with Ardell’s follow the money portion, my advice is to get tax advice from someone not connected to the short sale process. Surprisingly in Washington there is no clear authority on how non-judicial foreclosures are taxed, so some practitioners will treat them as “recourse” debt and some “non-recourse” debt and some either way depending on what is best for the client.

    The difference is with non-recourse there is no forgiveness of debt income (to the best of my limited understanding), so the party foreclosed may be able to take advantage of the gain on sale of residence exception in the event of a non-judicial foreclosure. Someone connected to the short sale process may not tell you that!

    One more thing. Harney IMHO covered this story on California short sales wrong, but this piece got it right:

    http://www.forbes.com/sites/peterjreilly/2013/11/17/irs-letter-to-senator-boxer-on-short-sales-not-good-news-for-everybody/

    That analysis might also apply to Washington non-judicial foreclosures, and be support for treating them as non-recourse events.

    Disclaimer: I am not a tax practitioner and this post is not intended to provide legal or tax advice, but instead to encourage people to get proper legal and tax advise from someone who does practice in the area (and is not connected to doing a short sale).

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  22. sam

    Speaking of fraud, this short sale smells like fraud where the seller had an arrangement with another buyer. This came on to MLS around 9 pm on Sunday/Monday and boom the next morning 9 am it was pending. Seriously??

    2933 NE Marquette Way, Issaquah, WA 98029

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  23. Kary L. Krismer

    RE: The Tim @ 23 – That happened back in July 2008? Time flies.

    Look at the difference in the data as of that point though.

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  24. mike

    RE: Erik @ 13 – Well, we did introduce a rather large and arbitrary wealth re-distribution program through the course of the ‘recovery’. I wouldn’t say that was entirely expected or in line with any existing rules up until a short while ago. On the one hand you have people on certain TV channels screaming until they’re red in the face about needing to cut $20/month worth of food stamps and end extended unemployment benefits. At the same time others are getting handed multiple 6 figure ‘bonuses’ tax free in the form of debt forgiveness for doing nothing more than making bad decisions.

    I think it’s healthy that people are questioning whether this is a wise precedent.

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  25. Azucar

    By Erik @ 17:

    RE: Azucar @ 15
    I short sold, and I would do it again. I feel I have integrity because I followed the rules. If you feel there is something more to it, you should start writing the laws based on your moral code. I will follow them.

    “Having integrity” and “following the rules” are not the same thing.

    IMO, “integrity” is related more to doing what you believe to be the “right thing” even when you are not required to do it. Your having started into the bit about not doing things according to my “moral code” and instead just getting anything I can within the rules (comment 13, where you said, “You would be less angry if you played by the rules as opposed to constantly attempting to overriding the laws with your personal moral code you created. I have seen this a lot on here and it is insanity in my opinion. The rules are the rules. Play by them and your life will be easier and you won’t get so frustrated about people getting more than you. They just played smarter than you.”) is why I mentioned the subject of “integrity”. You have acknowledged that it is against your moral code (or at least other people’s moral code) and yet you did it anyway because it gave you financial advantage and it was allowed under the rules. The only way that I can see your rationalization about that not saying something about “integrity” is if you are saying that your moral code differs from the one you outlined. However, if you’re saying that your moral code is more “loose” than that of the “stupid people who don’t take advantage of the rules like I did”, I don’t know how you rationalize THAT view as not saying something about your integrity.

    I have never been in the situation where I needed to make a short sale or get foreclosed (I guess that I haven’t been smart enough to get myself in that situation according to your statements?), so I honestly don’t know what my decision would be. I think it depends upon the details of the situation and how I got into it… If the details made me decide that I was ok with doing it, then I, too, would be arguing that the decision is not an indication of a lack of integrity. I don’t have enough of the details of the actual situation that you were in to make any kind of assessment of whether or not I think what YOU did was consistent of someone with “high integrity”.

    The details that you have shared in here, though, don’t point towards a favorable assessment if I were to be asked to make one…

    - It doesn’t seem that you’ve had a change in your ability to make the payments that you agreed to make (i.e. you haven’t mentioned a job change that resulted in lower income)
    - You seem to be pretty proud about how you “played the rules” to get a financial reward
    - You dove right back in to the housing market and are constantly bragging about how well it’s working out for you

    I’m not sure how you were able to get forgiveness for the amount of deficiency on your short sale, but if you made false statements (don’t you usually need to convince them that you’ve had a change in finances or other unexpected circumstance that makes it impossible for you to continue to make payments?) technically I think you are also incorrect when you say that you followed the rules. Making false statements or other misrepresentations, even if it can’t be proved that they were false, is still fraud and is not within the rules. And if your personal moral code is to “get what you can within the limit of the rules” then breaking that moral code would also reflect on your integrity. Going a step further, if your personal moral code is “get what you can get away with even if it’s breaking the rules, as long as it can’t be proved”, I think that also says something about integrity.

    The integrity argument that you are making would have been much easier had you gone along Ardell’s line of thinking – that the banks set up the situation that you ended up in and you were just doing what you could within their framework… but you deviated from that argument when you started down the path of “what is right according to your (my) moral code”.

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  26. Blurtman

    “- It doesn’t seem that you’ve had a change in your ability to make the payments that you agreed to make (i.e. you haven’t mentioned a job change that resulted in lower income)
    - You seem to be pretty proud about how you “played the rules” to get a financial reward
    - You dove right back in to the housing market and are constantly bragging about how well it’s working out for you.”

    This describes Tishman Speyer and other RE estate developers to a T. They made a wise business decision, and suffered no consequences for walking away from a $4 billion loan commitment. In fact, they were applauded for doing the right thing. And they got right back into borrowing money for new developments.

    So why when an individual engages in the same action, for the same reasons, is he pilloried by others? Why does the slave in shackles hate the slave who has decided to run?

    Who do the credit agencies serve? Not the consumers. And what is the purpose of the credit rating agencies? To enforce behavior that benefits industry. And do firms like Tishman Speyer have to sit out several years after defaulting before they can get another RE loan. Heck no.

    Kill the bankers, people. Or continue to moan in your shackles.

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  27. whatsmyname

    RE: ARDELL @ 19 – Ackk, Wily bankers are not forgetting everything they know to come out west and change the process on everyone fer quick takin’s. They are simply following the laws of the states where they do business. They ask their lawyers what is the best way to do things. Then, they do them that way.

    They do many things poorly (i.e. self insure in an overheated market, go immediately for poor resolutions or stall out on better resolutions), because they have policies… and employees, especially executive management employees. Just like other corporations. I am in no way feeling sorry for the banks or their losses here. I just had to set that straight.

    P.S. Everything else you said was right!

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  28. whatsmyname

    RE: Blurtman @ 27
    So one wall street sharpie out-negotiated some other wall street sharpies, and got burned for a lot less (although still over $100MM) when the sh*t went down. Lesson: We’re in shackles.

    I can never tell with you whether you are John Birch or Bader-Meinhoff.

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  29. Erik

    RE: Azucar @ 26
    I got a negative amortization loan where the payments kept increasing. I had no other choice. My payments were gonna raise 200 dollars that next year and there was no way I could afford an extra 200 dollars a year. I tried and tried to modify my loan. I got fed up and quit paying. I am very happy with my decision. I am no longer stressed about finances even though I am unemployed. I would urge anyone in my situation to make the same choice. Much less stress these days and much happier after accepting that short selling or foreclosing is okay.

    I think most people on here don’t get it cause they have more money. Sometimes you gotta take government handouts such as short sales and foreclosures. You don’t understand my situation sugar.

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  30. Erik

    RE: Blurtman @ 27
    I totally agree. It all depends on how you word it and who you are. The poor people get told they are bad and the rich people are applauded. Trump foreclosed his bad assets. Go after him and let me be Azucar. I like too see poor people get ahead. I don’t like to see rich glutinous bankers get richer. People on this site should feel okay about dumping their bad debt on the rich bankers. Not the rich bankers fleecing the poor people.

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  31. Blurtman

    RE: whatsmyname @ 29 – Not a cross between Ambrose Bierce and Herbert Marcusse?

    “Surely, no government can be expected to foster its own subversion, but in a democracy such a right is vested in the people (i.e. in the majority of the people). This means that the ways should not be blocked on which a subversive majority could develop, and if they are blocked by organized repression and indoctrination, their reopening may require apparently undemocratic means. They would include the withdrawal of toleration of speech and assembly from groups and movements which promote aggressive policies, armament, chauvinism, discrimination on the grounds of race and religion, or which oppose the extension of public services, social security, medical care, etc.”

    A less verbose Blurtman: “Kill the bankers!”

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  32. One Eyed Man

    RE: Blurtman @ 32

    I mean no disrespect Blurt, and I don’t intend to insult you, but I don’t understand your position. While I certainly believe in the correctness of my own analysis of the issues, I acknowledge that I am fallible (even if not necessarily human) and may well be missing the point. That said:

    What do you literally mean by “withdrawal of toleration.” If you mean to assemble and speak in opposition to those promoting concepts like bigotry, I stand beside you. But if you mean to outlaw and deny freedom of speech, thought, assembly, and similar intellectual freedoms commonly thought of as first amendment rights when exercised to promote the concepts you oppose, I and the founders of classic liberal political theory (and probably John Lennon’s ghost) stand firmly in your path. In essence, I see such a pre-emptory strike against intellectual freedom to be the realm of book burning fascists and other arrogant intellectual zealots even if you believe its for everyone’s collective good.

    And why “Kill the Bankers”? In your analysis, is the act of banking in itself immoral and/or anti-social? Do you believe George Bailey is the same as Mr. Potter regardless of how he conducts his business? Or do you only intend to condemn those who have utilized the business of banking in a corrupt, abusive and fraudulent manor?

    If “Kill the bankers” is more than hyperbole and you intend to eliminate “banking” itself, IMHO you lack an understanding of the significance of banking in an economy that aspires to be more than an extinct stone age barter system. Social Darwinism would likely once again present such a socio-economic system with extinction. A society without banking to facility trade, commerce, specialization and capital formation would be ill prepared to compete with the productivity and strength of competing cultures. Such a society would likely be unable to meet the material wants and desires of its own population, and would eventually foment internal discontent unless they live in the proverbial garden of Eden. In addition, if faced with outside competition, it would be unable to compete and soon suffer the same fate as the aboriginal American tribes.

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  33. whatsmyname

    RE: Blurtman @ 32 -
    Like Bierce, you have purity in your misanthropy. But do you claim the head injury too?
    Marcuse was just Pol Pot without the testicles (and plastic bags).

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  34. Blurtman

    RE: One Eyed Man @ 33 – Hi OEM,
    Apologies for not correctly ascribing the Marcuse quote to Marcuse, who BTW, I am no expert on. Noam Chomsky resounds with me more. It can be difficult to use the editing function on an iPad. But wmn’s Bader-Meinhoff gang comment reminded me about the influence of Marcuse on a wide range of leftists radicals when there were such things. I was a big fan of Abby Hoffman at the time, for example.

    You can interpret the excerpted quote as you like, and yes, many parts of it are indeed troubling. But it was intended to, part in jest for sure, compare the blurt “Kill the bankers!” to the much more eloquently stated Marcuse viewpoint. And by bankers, I mean investment bankers, in particular, those who concocted the massive frauds that brought down the world’s economies, destroying the lives of millions in the process.

    But i think my blurt is consistent with Marcuse’s philosophy. When you have a government colluding with the baks to spy on peaceful citizens. When you have a government that shamelessly and openly enforces a two-tiered justice system, destroying the lives of countless incarcerated individuals for crimes that wealthy bankers may commit literally with impunity, then yes, drastic actions may well be necessary and moral.

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  35. Ira Sacharoff

    RE: Blurtman @ 35
    I like the Herbert Marcuse-Ambrose Bierce hybrid. Myself, I’m a Karl Marx-Groucho Marx cross.

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  36. Blurtman

    RE: Ira Sacharoff @ 36 – I’m a Harpo man, myself.

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  37. Haybaler

    RE: One Eyed Man @ 33
    Great post.
    FYI….end of para 3…..manner = manor….
    I’m sure you’ll want to edit that for posterity, as the internet is forever.

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  38. Azucar

    By Erik @ 30:

    RE: Azucar @ 26
    I got a negative amortization loan where the payments kept increasing. I had no other choice. My payments were gonna raise 200 dollars that next year and there was no way I could afford an extra 200 dollars a year. I tried and tried to modify my loan. I got fed up and quit paying. I am very happy with my decision. I am no longer stressed about finances even though I am unemployed. I would urge anyone in my situation to make the same choice. Much less stress these days and much happier after accepting that short selling or foreclosing is okay.

    I think most people on here don’t get it cause they have more money. Sometimes you gotta take government handouts such as short sales and foreclosures. You don’t understand my situation sugar.

    Well, I can’t say what I would do in the situation that you were in, because I honestly don’t know.

    But I will say that I wouldn’t have gotten myself into that situation. You say that you “got a negative amortization loan where the payments kept increasing” as if it was a surprise that that was going to happen. I wouldn’t get one of those for the very reason that was what made it so you “had to” walk away from the loan. If you knew that the payments were going to be increasing (and I am giving you enough credit to assume that you did), then what was your plan for keeping up with those payments? I suspect that your plan was to sell the place at a tidy profit once it had risen with the “always increasing” real estate market and to use those profits to put a bigger down payment on maybe a less expensive place. You took the gamble and spent beyond your means by taking a loan that allowed you to borrow more than you could afford… I guess that’s where the bank was also at fault and how, if I were you, I would justify it. But from a more objective perspective where you didn’t get let off the hook of owing a lot of money, don’t you think there’s something fundamentally wrong with being able to take a big gamble and, when the dice do not go your way, to just walk away from the consequences of it? “All the other kids are doing it” doesn’t make it right.

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