Judicial vs non-judicial forclosure (careful what you wish for)
invite response
2010 Jan 10, 4:25am 1,470 views 2 comments
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justme
2010 Jan 10, 8:37am
Well, what was the legal challenge you read about, exactly? Who was challenging whom, and for what purpose?
deanrite,
I hear your frustration and agree. However, you should read up on your foreclosure law before you post. I don't think you have all the information regarding deficiency suits and whether banks can even bring them. Besides, if the government would simply allow the foreclosure process to take its course, all the speculators and the banks would be hurt--speculators by losing their property through foreclosure and banks by losing the money loaned when the purchaser of the foreclosed home buys it for an amount far below what the original loan amount was. That is not happening, though, which is very disappointing.
Read some about a legal challenge to non-judicial foreclosure in California. As I understand it, most mortgages have been written as non-recourse loans in cal. This means banks can just file nessessary paperwork and take back the home without filing suit against the homeowner. In the not too distant past this worked out cheap and easy for the banks.
In today's world this means banks are taking it in the shorts. Now I think they should get their asses hung out to dry for their irresponsible shennanigens. But to be fair, so should some of the would-be speculators. Let's face facts. A lot of homes foreclosed on were bought by speculative investors with lots of cash leveraging. If they actually had been sued for deficiancies banks would be able to subject these people to the discovery process. Then they would be forced to live up to their finacial obligation and bear the brunt of their financial folly. Instead most of these clowns are buying up properties, screwing the banks, the government, the taxpayer, and probably getting multiple homebuyer taxcredits to boot. Two points. Banks should automatically file a deficiency lawsuit on every proprty they foreclose on if they know it's underwater. This way they can determine whether the person can pay. This is absolutly fair. Just because you paid too much for your 'investment' doesn't mean everybody else should pay for your loss.
The second is that banks should never again make non-recourse loans. That should also apply to modifications.
#housing