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I know 2 couples, second hand, that got foreclosed on. They're renting right now. They're doing fine with the 300k (for one couple, and almost $400k for the other) cash they took out from refinancing the home.

They're probably in a position to purchase another home in all cash.

@Vain

Thanks for the story. So they didn't even spend the cash. Their refinacing would remove the non-recourse status of their loan I presume?

That's correct. They put $0 down initially, and had an exotic loan with a payment much less than what would amortize. They refinanced once payments started increasing and took more out along the way. In the end, they walked off with huge amounts of cash, and probably just paid high rent for a couple of years.

Their incomes would have never qualified for the loan. The lender did not even bother to call the fake clients listed as references that supported their "self employment." Neither of them were self employed, and the incomes listed were all make-believe.

Addition: I do recall that every time they refinanced, they were gifted something like an LCD TV, and such. The brokers used to refinance were their friends whom obviously knew about the make-believe information.

Hmmm...

Which brings us to (...What will ... eventually happen?)

http://patrick.net/?p=603029

Any other stories? Who is living in a car or worse?

It's hard to tell. LA always has quite a few homeless roaming around. After recession/crash I could certainly see/feel that there are more folks who are homeless.

But really it is hard to measure. I do think most just end up renting, but thats people who have income. Our renter didn't pay rent for 6 month because he foreclosed and had no job... he was using our rental as a shelter for a while.

vain says

That’s correct. They put $0 down initially, and had an exotic loan with a payment much less than what would amortize. They refinanced once payments started increasing and took more out along the way. In the end, they walked off with huge amounts of cash, and probably just paid high rent for a couple of years.
Their incomes would have never qualified for the loan. The lender did not even bother to call the fake clients listed as references that supported their “self employment.” Neither of them were self employed, and the incomes listed were all make-believe.
Addition: I do recall that every time they refinanced, they were gifted something like an LCD TV, and such. The brokers used to refinance were their friends whom obviously knew about the make-believe information.

The only word for this is: OBSCENE. They essentially stole hundreds of thousands of dollars. Makes me want to puke.

pkowen says

The only word for this is: OBSCENE. They essentially stole hundreds of thousands of dollars. Makes me want to puke.

Essentially that's what they did. But realistically, the money was given to them. Nothing stolen there. Some times I wished I was in their position :)

But really, most foreclosures that I see had so much cash taken out that they shouldn't deserve any pity. Most are probably well off still.

Of course they want to make it seems like they're doing fine. But I doubt it.

strategic foreclosures probably wont end up homeless but they'll have to settle for whichever landlord will take them in as a charity case. And will probably end up paying above market rents.

vain says

pkowen says

The only word for this is: OBSCENE. They essentially stole hundreds of thousands of dollars. Makes me want to puke.

Essentially that’s what they did. But realistically, the money was given to them. Nothing stolen there. Some times I wished I was in their position
But really, most foreclosures that I see had so much cash taken out that they shouldn’t deserve any pity. Most are probably well off still.

Sadly money wasn't even given to them. I don't think actual physical dollars were floating anywhere. It was all fake future debt and promises.

A bit off topic, but:
One of the reasons I don't agree with recourse on house loans. House they can get back, but money that never existed shouldn't shackle someone... otherwise a private corporation can simply print money and become a treasury of united states on it's own.

vain says

I know 2 couples, second hand, that got foreclosed on. They’re renting right now. They’re doing fine with the 300k (for one couple, and almost $400k for the other) cash they took out from refinancing the home.
They’re probably in a position to purchase another home in all cash.

I'm pretty positive even in California the bank and debtors can come after you for home equity loans... Home equity loans aren't non-recourse like a mortgage usually is. Their paychecks may start to be garnished if anyone they owe money to decides to sue them! They better watch their backs!

vain says

Essentially that’s what they did. But realistically, the money was given to them. Nothing stolen there. Some times I wished I was in their position

But really, most foreclosures that I see had so much cash taken out that they shouldn’t deserve any pity. Most are probably well off still.

They will have to pay it back.. Unless it's money they saved while SQUATTING.. they can keep that money most likely. The Bank can come after you for home equity loans... You would have to declare bankruptcy to get out of that trouble! (And then all that money would be gone!)

LA Renter - They have nothing to their names anymore and a load of cash. If I was them, if a lawyer couldn't help me, I'd just leave the country.

Losing their home and being chased out of the country in order to get away with money stolen from creditors. Sounds like they're doing just fine?

The focus here isn't to slam the downtrodden or homeless, but I want the media to be realistic and call a spade a spade.
Most of these people losing their homes will still be OK (I doubt they would want to live in some of the matchbox sized places I have endured so that I could reach financial goals).

OK, it's squatters then...

I must be reading the wrong articles....LoL! :-)

I appreciate any links on the squatters.

The way it has been portrayed in the mass media, it seems like the implication of losing your home is being thrown out on the streets (to become homeless). I find this to be biased reporting,

LOL. I've caught myself yelling at the radio or TV a few times about just this point.

I'll leave the pity to somebody that actually doesn't have a home, not going to waste it on somebody that might have to... *gasp*... rent.

MarkInSF says

The way it has been portrayed in the mass media, it seems like the implication of losing your home is being thrown out on the streets (to become homeless). I find this to be biased reporting,

LOL. I’ve caught myself yelling at the radio or TV a few times about just this point.
I’ll leave the pity to somebody that actually doesn’t have a home, not going to waste it on somebody that might have to… *gasp*… rent.

You know it really depends. I have never seen a neighborhood so distressed as it is now after the crash. We had a renter that had no job for over a year doing random side jobs he found on craigslist. Times are very rough out here. It was either us not charging him rent or him living on a street. All while the big banks got all the bail outs and are harassing people over fictitious debt.

Sure some people who foreclosed can go rent and are young. But not our neighbor who is 56 and is now foreclosed and unemployed. There are plenty of people who are legitimately hurt by this.

I do really feel a lot of anger toward the banking industry in our nation. It is beyond shame that in todays age and society in our nation is it a crime to be down on once luck, even if you were put there by some of the world's richest banks, which continue to rake in record profits purely because they got a big fat handout from the government and get to make money of out thin air.

I can see why executives of big banks always end up on the media attempting to justify to us all that the problem is never their own Ponzi scheme, or their deceptive lending practices, but the problem is the deadbeat homeowners/borrowers who don't pay their bills.

I really feel hatred toward the banking industry over this mess.

ChrisLA says

Sure some people who foreclosed can go rent and are young. But not our neighbor who is 56 and is now foreclosed and unemployed. There are plenty of people who are legitimately hurt by this.

The problem you appear to be talking about is unemployment, not loosing a home. And that is deserving of sympathy.

If you don't have assets or income you loose your home whether you're a renter or a "homeowner".

How many news stories have there been about renters loosing their homes due to unemployment? Why is the homeowner the target of special pity?

MarkInSF says

ChrisLA says

Sure some people who foreclosed can go rent and are young. But not our neighbor who is 56 and is now foreclosed and unemployed. There are plenty of people who are legitimately hurt by this.

The problem you appear to be talking about is unemployment, not loosing a home. And that is deserving of sympathy.
If you don’t have assets or income you loose your home whether you’re a renter or a “homeowner”.
How many news stories have there been about renters loosing their homes due to unemployment? Why is the homeowner the target of special pity?

But Mark,

This huge unemployment came because the bubble crashed. I'm not saying renters or homeowners need special treatment. I think a bigger issue needs to be addressed. Banks are responsible for the unemployment. They created a bubble that caused economy to function in certain way. And when it crashed unemployment rose, and of course people started foreclosing because they can no longer pay their bills. A lot of people were hurt in many ways, pain wasn't exclusive to home owners. Our new renter lost his business, his house and a lot of dignity in the process.

Realistically I do think banks and all government big shots (it was a huge government failure) should be held liable for anyone who was a legitimate victim here. I don't know how, but bail outs certainly didn't accomplish a proper punishment. We are all tied together in this system of economics. Except people always pay, banks always collect. That's our crony capitalism.

ChrisLA says

I think a bigger issue needs to be addressed

I'm with you there.

I was just responding the the posters observation that foreclosure usually does not result in homelessness, and an in any even it's no less tragic than a renter becoming homeless.

ChrisLA says

One of the reasons I don’t agree with recourse on house loans. House they can get back, but money that never existed shouldn’t shackle someone… otherwise a private corporation can simply print money and become a treasury of united states on it’s own.

I'm not arguing one way or the other for recourse loans, but what you wrote doesn't make sense. How is a home loan "money that never existed"? If I sell a house, I get all the money that I sold it for; it's not imaginary. Whether the buyer financed the purchase or not, it's real money going to the seller. Nothing non-existent about it. If you take out a home loan, you are borrowing money. Real money.

And private corporations cannot print money. That's just silly.

gameisrigged says

If I sell a house, I get all the money that I sold it for; it’s not imaginary

Game, all money is imaginary. It's all accounting of who owes who how much.

If you sell me your home for $100K, no bank involved, and I give you $10K and I promise to pay another $90K over 10 years, where did I get the money to pay for the home?

We just imagined it.

The only difference when a bank is involved is that the bank is a third party, guaranteeing my promise to pay you. I owe the bank $90K instead of you. And you, instead of a promise, have $90K of "money" in the bank, in the form of a banking deposit.

Private corporation can's print money? Then you're going to have to explain why the amount of banking deposits is many multiples of the amount of money the government has printed.

MarkInSF says

gameisrigged says

If I sell a house, I get all the money that I sold it for; it’s not imaginary

Game, all money is imaginary. It’s all accounting of who owes who how much.

Ooh, maybe you're just a head in a box, and the whole universe is in your imagination... wow, dude.

Now, back to the actual POINT...

There is wealth that doesn't actually exist. For example, if home prices go up, and you tell yourself you have x dollars in theoretical "equity", but you never sell your house or take out any loans, prices could go down again, and that "money" never really existed.

But a home loan does not fall into that category. It IS actual money. It is paid to the seller. Just because a transaction is recorded rather than actual paper money changing hands does not mean it isn't real money, or that it is somehow "imaginary". That's just stupid, Mark. You're conflating two different issues. And the bank doesn't just "guarantee a promise"; they provide the money. If I sell a house, the bank doesn't just promise to give me the money; they actually DO so. Again, whether it's recorded as a transaction as opposed to a man coming with a briefcase full of 100 dollar bills is immaterial. It's still money. This pseudo-metaphysical crap you are spewing is preposterous.

And no, I don't have to explain shit. Private corporations cannot print money. I have no idea what your cryptic sentence about banking deposits has to do with anything. That's not printing money. Maybe you are talking about writing a check? Yeah, they can do that. So can I. Big deal.

I understand your point that there is more debt than the actual physical amount of currency that is in circulation, but ChrisLA is arguing that a loan is money that "never existed" and therefore shouldn't have to be paid back, and I am not seeing the connection between these two concepts. The money certainly existed to the recipient of the funds.

MarkInSF says

Private corporation can’s print money? Then you’re going to have to explain why the amount of banking deposits is many multiples of the amount of money the government has printed.

Theoretically, the banks have no limit on how many loans they can created. However, all loans have to be repaid with interest.
If the borrowers took the money and ran away, the whole banking industrial will collapse.

For example, I took out a $100k loan. I cannot just go buy a big fancy car and forgot about the loan.
I have to find a job and make $100k + interest and repaid the loans.

During the process, you can see that I actually increase the GDP output by $100k + interest.

It's the "I'll never rent again ego." that many of my friends seem to be working though at the moment. I explain they never really owned, to maybe help with the mental hurdle ,..it doesn't. What a psychological mess.

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/17/AR2011021703960.html?sub=AR

Homeless Realtor meets Homeless Mortgage Broker.

I do see alot of people who are pooling resources - multiple families in one house, etc. It doesn't seem to be the norm for people to have money left over from their refi's. But then again, many of the clients that I see are already on the edge. Maybe ya'll see them before the edge?