patrick.net

If you look at this issue strictly from a numbers perspective, there are far to many people that have or will have foreclosures on their record for banks not to lend to them after some period of time, walk aways or not. The housing crash has affected everything and a foreclosure/shortsale/bankruptcy will mean less than it would have before the bubble. The problem now is that the banks aren't lending for residential property like they once did, and for good reason, the market hasn't stopped going down for many areas. Once it bottoms, appropriate underwriting standards will kick in, true borrower risk will be assessed, and things will achieve some equilibrium moving forward. At worst I think a person who walks away may face the prospect of a higher interest rate and larger down payment. I remember a client saying that he bought a house after a bankruptcy and all it meant was he didn't get the low interest rate right away....he just had to refinance a year or two later.

As a reference point, Banks already are finding ways of loaning to strategic defaulters. http://www.irvinehousingblog.com/blog/comments/banks-encourage-strategic-default-by-reducing-fico-impact/

fatblond says

If you look at this issue strictly from a numbers perspective, there are far to many people that have or will have foreclosures on their record for banks not to lend to them after some period of time, walk aways or not.

Proven deadbeats won't be high on their list of "I must have this customer," despite whatever you're wishing will be the case.

fatblond says

At worst I think a person who walks away may face the prospect of a higher interest rate and larger down payment.

This is probably true. Better start saving.

klarek says

I know somebody that bought, did at least TWO equity extractions, short sold in 2007, and bought again late in 2009 (a foreclosure). He’s pretty much your quintessential deadbeat shithead that wouldn’t hesitate to take out another large chunk of equity if he weren’t underwater again.

klarek says

Proven deadbeats won’t be high on their list of “I must have this customer,” despite whatever you’re wishing will be the case.

Don't these two comments conflict?

Mr.Fantastic says

I wouldn’t put money into a bank that would allow a defaulter to get another loan merely 3 years after they ran away.
The minimum should be 10 years.

So then you are going to stuff your money in a mattress?

ch_tah says

Don’t these two comments conflict?

Only if you don't know the difference between a short sale and a foreclosure.

klarek says

ch_tah says

Don’t these two comments conflict?

Only if you don’t know the difference between a short sale and a foreclosure.

I guess I equated the two since you did - deadbeats.

ch_tah says

I guess I equated the two since you did - deadbeats.

I knew the guy and he was a deadbeat before he bought his first place (which I urged him not to). No bank exceptions were made to make deadbeat short-sellers like him able to buy again. So when I said that proven deadbeats won’t be high on their list of "I must have this customer", there's nothing contradictory there.

klarek says

ch_tah says

I guess I equated the two since you did - deadbeats.

I knew the guy and he was a deadbeat before he bought his first place (which I urged him not to). No bank exceptions were made to make deadbeat short-sellers like him able to buy again. So when I said that proven deadbeats won’t be high on their list of “I must have this customer”, there’s nothing contradictory there.

Okee dokee.

ch_tah says

klarek says

ch_tah says

I guess I equated the two since you did - deadbeats.

I knew the guy and he was a deadbeat before he bought his first place (which I urged him not to). No bank exceptions were made to make deadbeat short-sellers like him able to buy again. So when I said that proven deadbeats won’t be high on their list of “I must have this customer”, there’s nothing contradictory there.

Okee dokee.

I love it.

To think of Banks as some monolithic entity moving in lock step is silly. Some Banks won't lend to sub prime borrowers ever again. Some will. Some will not lend to those with Short Sales and Foreclosures and Bankruptcy on their credit reports. Some will. It doesn't matter whether they are "high" on the list or not. The shear volume of people that will have scarlet letters on their credit report will create a market which some Banks will earnestly exploit.

As I said, they will make profits by charging higher rates and they will cover risk by better underwriting and asking for higher down payments.

@Mr.Fantastic

>As they should. 50% down and 18% sound about right.

LOL.!..getting better. OK Mr. Fantastic, I'm unignoring you and I will read more if you don't go back to the foul name calling like before...

Not so LOL. In 1980, we had 30% down. I have heard that Mortgage rates during that time were as high as 16% and I think eventually topped at 18%. Thanks to the Savings and Loan scandal and Jimmy Carter. Our rate was 13%. Takes a long time to pay off any noticeable principal, even when you don't borrow very much.

Fatblond is right. The defaulters will get loans... at very high rates.

@Payoff2011

My LOL was more of a "they deserve to pay more for their irresposibility" laugh than a "your idea is crazy to think interest rate and downpayments could ever get so high again laugh" FYI.

@fatblond

"If you look at this issue strictly from a numbers perspective, there are far to many people that have or will have foreclosures on their record for banks not to lend to them after some period of time."

So will those who didn't walk away get some outstanding rates/deals from banks since they are "rare gems" as borrowers?

Hmmm, good info from several in here. Nothing on mortgage tranches. Would be nice to hear from someone who knows if CMO's are trading. Obviously they are since our mortgages are immediately being sold to F/F/G. The whole trick was to stuff a tranche full of crapola and relabel it as A+ or whatever. So, if they are selling and FED or whomever is buying then who really cares if they will really pay. You see, it doesn't matter to the FED because they can just print more money. I think people on this list tend to loose sight of the overall system and what matters. Some Joe Conartist strategically defaulting doesn't break the buck when the FED/banks can eat the mortgage payment and pretend its still a fine investment. FED has "Total assets in the March 16 week came in at $2.587 trillion. " -- http://www.totalmortgage.com/blog/mortgage-rates/federal-reserve-may-resume-asset-purchases/5377
How many are mortgages? how many are not being paid? how abuot F/F/G? Are they actually expecting their mortgages to be paid? Who's the sly fox: the worker who saves and pays for his house or the conartist who takes advantage of these free money programs?
At least one Congressman on the Housing committee filed for bankruptcy himself:
http://www.cincinnatiohiobankruptcyattorney.com/2011/02/congressman-files-for-personal-bankruptcy.shtml

FED position info:
http://www.infiniteunknown.net/2011/02/28/federal-reserve-owns-37-percent-more-treasurys-than-china-balance-sheet-update/
1.2T MBS, ~2T treasuries. Same pump.
1.2T/50M houses with mortgages (I guess) => $24k. Or, at $200K home value, 6M houses. That is a LOT.