In the news today
I've been seeing more and more MSM articles which are humorous if viewed in the right way. Here's one.
Arson
The key quote:
I just wonder if they are including the number of Americans who became criminals during the boom years as well.
Arson
The key quote:
Authorities in economically stressed cities see an increase in torched houses. Is the nation's mortgage mess transforming more Americans into criminals?
I just wonder if they are including the number of Americans who became criminals during the boom years as well.
Comments
The irony is that it is only now that the criminal actions of past years is starting to come to light. Rising prices masked a great deal of the criminal activity taking place while the bubble was inflating. It is only now that all these past sins become obvious.
In fact, all the calls to do something about real-estate fraud are a little late. The time to do something was several years ago. There simply isn't very much new fraud taking place today.
Good points, but I would guess there is probably plenty-o-fraud being committed on those being foreclosed upon. And I am not sure how to characterize the You Walk Away crowd. I guess it is not technically fraud. Unethical, but not illegal.
I believe that we have a huge number of people in the real estate industry who received very little training as to what constitutes fraud. Those folks are still writing mortgage loans and selling homes.
Even recently in the classroom when I explained about jacking up the sales price so that the homebuyer would receive cash from the seller under the table after closing, I had an combo agent/lo feign ignorance to that practice being a problem.
Also, with desperate times comes the motivation to act more in line with self-interest.
Further, we do not have enough government resources (state investigators, FBI agents) to investigate and prosecute all the players. I've got to think that some fraud will continue to slide through the cracks and then we all end up paying for it in the form of a massive bailout like what is surely headed our way.
This may be perfectly true (i.e. that many of the people who committed fraud are still in the real-estate industry). However, from what I hear it is much harder to commit fraud these days if for no other reason than that the lenders are much less willing to just accept what they are told.
For one thing, you just can't get some of the loan products that were popular with criminals (e.g. no money down, no doc). Lenders are giving loan applications far more scrutiny, asking for additional appraisals, etc.
In this environment committing fraud is much more difficult. The days when a loan officer would purposefully ignore some inconsistencies in applications are over.
I don't think anything about walking away could be considered unethical. Well, in the extreme cases, like letting pigs into the house, I agree. But in general I don't. When a collateralized contract is written up (like a mortgage), the buyer agrees to forfeit the collateral in any case where they chose to stop making payments.
How is this any different than pawn shops? Pawn a CD if you need cash, and if you don't come back and pay for it then the shop sells it off.
If banks were doing this out of charity, with 0% interest rates, that would be one thing. But they aren't.
Insurance fraud, destruction of property, and arson however are obviously unethical (and illegal). Now living in a home you aren't making payments on for 8 months, that's more of a grey area. I wouldn't be surprised to see some lawsuits between banks and the companies who are helping individuals do this.
because there is an explicit "put" for the pawn shop in that contract. There is nothing unethical about doing what is explicit in the contract. This language doesn't exist in a mortgage contract. It's like if I sold you a call on a stock but then didn't pay you when it went up because I didn't "feel like it". It's behavior so far out of line with what is contemplated that it isn't even considered in the language - yet.
It is nothing like defaulting on a call. Perhaps if you sold me a call with your car as collateral in case you somehow defaulted on the call. Then you could decide to give me the car or give me the stock. I'd be stupid to buy that call.
That being said, I expect the "no recourse" laws protecting primary residences in most states to be weakened if these walk-aways happen in large numbers.
Not that I'm trying to play the moralist here or anything. I'll leave that to others :twisted:
I would (and indeed do) argue that in any contract involving collateral, the lender assumes the risk that they may end up with the collateral rather than being repaid (with interest) the loan amount. Look up the definition of collateral and you'll find something like the following:
1. security pledged for the payment of a loan: He gave the bank some stocks and bonds as collateral for the money he borrowed.
If the borrower refuses to repay the loan, the lender has two options. A) Force the borrower to repay,
So, while i don't consider it especially fraudulent or even unethical to try to stay in your home for as long as you can get away with, it may be irresponsible for the "Just Walk Away" folks to suggest that you can stay for 8 months. Maybe in a mortgage state, but not likely in a deed of trust state.
I think the point is that for $1000, they will guide you through the process. It's easier to do it en masse rather than have each person hire their own lawyer. It looks to me like the information is tailored to each region, and that these services also will inform you when your time is almost up.
FREE counseling is available through HUD-approved housing counseling agencies. There are hundreds of these avail all across the U.S.
We fund social services like this through our tax dollars. If these people have $1,000 then why aren't they able to take HALF that amount and hire an attorney for themselves in their own state? It may even cost way less than that.
When people are in true financial distress, they can apply to receive FREE LEGAL AID through the local county bar association.
They can get some of these same documents for FREE (such as a copy of their state's foreclosure laws) just by going to the internet.
I for one couldn't open up a service and charge that dollar amount to people in distress when so much is available for free. I guess that makes me a lousy capitalist but at least I can sleep at night. Then again, I'm sure those folks are sleeping well too.
This is nothing more than another foreclosure rescue scam where people are taking advantage of consumers who are easy prey. I wonder what their profit margins are like? They're getting lots of free press, they have to pay attorneys to answer the phones....they could hire baby attorneys fresh out of law school and pay them on the low end.....everything else is free other than the cost of printing and mailing the documents.
These consumers need to have someone explain all the CONSEQUENCES both positive and negative of just "staying in your home and not making payments" for X months.