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This will encourage almost all mortgage holders to stop paying.
2011 Jan 8, 2:02am 10,600 views 27 comments
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I think I'm going on 3 years of stories like this that are supposed to be the game changer and lead to the downfall of the banking system. Still waiting...
Even if they can't foreclose that doesn't necessarily mean they can't collect - they may still be able to garnish your wages, seize your bank accounts, etc. Not the panacea that some might hope for, though why anyone would hope that people who bought homes they couldn't afford would get to keep them, effectively forcing the rest of us to pay for them - the responsible to cover the losses of the gamblers and irresponsible, yet again - is beyond me to begin with.
LarryPatrickMaloney
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2011 Jan 8, 3:46am
Garnish your wages?
Not likely That happens when the IRS comes after you. That doesn't happen in a foreclosure.
I recommend, everyone read my posting from ealier this year.
People should consider stopping their mortgage payment and saving up resources if it makes sense economically for them to do so.
FortWayne
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2011 Jan 9, 12:22pm
Banks run this country, do you think they will ever let this happen?
Garnish your wages?
Not likely That happens when the IRS comes after you. That doesn’t happen in a foreclosure.
I recommend, everyone read my posting from ealier this year.
http://patrick.net/?p=28945
The scope of what they can do would vary state to state, and I don't know what the rules are for when they can get them directly from the employer (which again would vary state to state), but see, e.g., http://www.sun-sentinel.com/business/fl-bank-mortgage-garnish-20110107,0,5129126.story right from the front page - they are seizing funds directly from people's bank accounts, etc., and wage garnishment for a judgment is certainly a possibility. Other states are not like California, and even here, if you converted your loan to a recourse loan (through refinance, etc.), all kinds of badness may wait on the other side for you.
Banks run this country, do you think they will ever let this happen?
Apparently not. However, if public do something en-mass, make no mistake it can give the banks some real trouble. I still remember the bank run to Indymac in 2008, it was a phenomenon. The law is created to govern those who obey. When in chaos, the law is useless, only the force or military is the real power that governs.
LarryPatrickMaloney
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2011 Jan 10, 1:47am
larrypa
Jim, apparently you are correct, in certain circumstances. I spoke with a mortgage broker yesterday (while spending the afternoon having fun looking at open houses).
Seems that if you have an equity loan (heloc), and you use the funds for something OTHER than house improvements, it can convert to a recourse loan) However, I'm not sure about the status of the first, I"m pretty sure the 1st is always a non-recourse.
The first converts to a recourse loan if it is refinanced or modified.
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http://www.palmbeachpost.com/money/real-estate/court-rules-against-banks-in-pivotal-mortgage-case-1171822.html
With most of the residential mortgage were securitized, most lenders will have difficult time to prove their ownership of the mortgage. If banks cannot prove they own the mortgage, there is no point to pay since one can get the home free. With most of the court rule the case base on precedence, the banks can be in trouble. It is a moral hazard but nowadays, not much moral value are left when confronting with $$, especially in the US.
This really spell a big big future trouble for banks.
#housing