Reactions to story from http://online.wsj.com

• 

  Cash for Keys in Vegas, Foreign Buyers in Detroit

  http://mjperry.blogspot.com/2008/03/cash-for-keys-in-vegas-f...
  115 days ago in CARPE DIEM · Authority: 344

  A few interesting real estate stories: 1. Wall Street Journal--These days, bankers and mortgage companies often find that by the time they get the keys back from foreclosed homes, embittered homeowners have stripped out appliances, punched holes in
• 

  My Nosey Ass!

  http://www.waitingforwhatsnext.com/2008_06_09_archive.html#4...
  45 days ago in Waiting for...What's Next · No authority yet

  I just found out that someone is living in the house we lost to foreclosure. Yeah, I said it. FORECLOSURE. I am curious to see who bought it. I am tempted to drive by and check them out. Is that bad? Whoever you are, you got a great deal on that prime piece of bank owned property. We did not pour cement down the drain, or smash holes in the walls, or take any of the fixtures. We just left. I packed up the things I wanted to bring and threw away a lot of shit I did not want. I purged. That house never felt like home to me anyway. The light switches never seemed to be where they ‘should’ be. I never cooked a ‘to die for’ meal and we just never seemed happy there. It was just a house. I think it was built on Indian burial ground. To be able to come back to the first house we bought, was a blessing. They say that God takes care of babies and fools. So, God was like, ‘Let me take care of those fools, because they go them babies’. We should have never bought that house. We should have just stayed our happy asses right here in this house were are in now. yada.yada.yada. Shoulda, coulda, woulda but we didn’t. I still wanna see who lives there now...
• 

  Alla porta, ovvero la vera storia di chi non paga il mutuo

  http://capireilmercato.com/?p=18
  49 days ago in Bentornati : Capire il Mercato · Authority: 1

  Quanto perde una banca quando un proprietario di casa smette di pagare il mutuo? Circa metà del valore del mutuo, partendo dal presupposto che non ci sia stata frode. Questo articolo vi spiegherà come funziona il processo del foreclosure (letteralmente: pignoramento immobiliare) in un caso normale e in un caso, meno comune, di frode. Ecco una semplificazione del processo reale che, credo, metta in luce aspetti importanti; ecco il mio indirizzo per contattarmi o segnalarmi eventuali imprecisioni. Il caso tipico (o almeno quello descritto nei programmi in TV, clicca qui o cerca foreclosure su google) di un proprietario di casa che non riesce a pagare il mutuo è più meno questo: un cittadino modello in qualsiasi altra situazione della vita, (chiamiamolo signor Smith), va in banca ad accendere un mutuo per comprare casa. È probabile che lo sportellista dica al signor Smith quello che un broker una volta mi disse quando stavo analizzando i documenti del mutuo, sulla “golden rule”, la legge d’oro: chi ha l’oro fa le regole. In altre parole, “firma i documenti adesso o dimenticati il mutuo e torna un altro giorno” (approfondendo la storia del signor Smith, qualcuno avrebbe potuto notare che aveva appena comprato diverse macchine nuove e aveva appena fatto una vacanza ai Caraibi, o che era stato “persuaso” dal bancario ad esagerare il suo reddito per avere accesso a un mutuo per una casa molto più costosa che mai si sarebbe potuto permettere altrimenti; in molti casi la colpa per la scelta sbagliata del mutuo può essere ben suddivisa tra diversi soggetti).Comunque il signor Smith, dopo un anno o due di pagamenti abbastanza bassi, si accorge che le sue rate sono diventate ora molto più alte. Probabilmente il signor Smith aveva scelto un mutuo a tasso variabile (come questa) che gli consentiva di fare dei piccoli pagamenti ogni mese, ma ora la rata è diventata insostenibile. Il signor Smith aveva poca liquidità per la sua casa (probabilmente aveva fatto un mutuo al 95% se non di più e le prime rate erano di fatto solo gli interessi). Dopo ogni rata non pagata il signor Smith riceve una lettera dalla banca, e dopo tre o quattro pagamenti non ricevuti, la banca lo porta in tribunale per farlo dichiarare insolvente, e ottenere il diritto di prendersi la casa e rivenderla. Il signor Smith potrebbe anche cercare di vendere la casa, ma si rende conto che quello che ricaverebbe dalla vendita è comunque inferiore a quanto deve alla banca; parte di questa differenza potrebbe essere dovuta al prezzo gonfiato pagato dal signor Smith, parte a una caduta dei prezzi da quando aveva comprato casa. (Anni fa, il funzionario di filiale sarebbe andato dal signor Smith e avrebbe cercato di trovare una soluzione per aiutarlo; oggi probabilmente il mutuo del signor Smith è stato rivenduto diverse volte e probabilmente lui sta pagando una società in un altro stato con la quale non aveva relazioni prima di allora. Ancora, un aneddoto personale: anni fa avevo un mutuo che era stato rivenduto un paio di volte; il nuovo proprietario del mio mutuo mi aveva chiamato per offrirmi un rifinanziamento a un tasso inferiore. Ma dopo alcune domande mi sono reso conto che la banca non aveva tra i suoi prodotti il mio tipo di prestito. Ho rifinanziato il debito con un altro prestatore, ma se avessi avuto difficoltà finanziarie sarebbe stato impossibile, per quella banca che aveva acquistato il mio prestito, rinegoziare le condizioni del mio debito.) Una possibilità (prima che la banca prenda possesso della casa, del foreclosure, appunto) è che il signor Smith organizzi uno “short sale”, nel quale vende la casa a un prezzo inferiore di quello che deve alla banca. La banca deve stabilire che il signor Smith ha fatto tutti gli sforzi possibili per vendere al meglio la sua casa e che è effettivamente in una posizione finanziaria difficile non per colpa di un suo comportamento eccessivo. Lo short sale è difficile se il signor Smith ha un secondo mutuo sulla casa, perché la società emittente del secondo mutuo (e quindi probabilmente coperta da ipoteca di secondo grado) non riceverà nulla fino a che il primo mutuo non è ripagato completamente. Se entrambi i mutui sono stati accesi dallo stesso istituto, non c’è conflitto. Ma se i prestiti sono stati accesi da diversi istituti è difficile risolvere il problema. Il vantaggio (per la banca) di uno short sale è che la casa rimane in buone condizioni e la banca riesce a recuperare circa il 70% o più del mutuo. Tuttavia, se lo short sale non è possibile, la banca deve prendere il titolo della proprietà (foreclosure) e venderla. Una volta che la banca possiede la casa deve coprire spese non indifferenti (tasse, spese di condominio, spese per curare il giardino, etc.). Tuttavia potrebbe aver bisogno di un po’ di tempo per mandare via il signor Smith dalla casa. Se il signor Smith non se ne va di sua spontanea volontà, la banca può offrirgli attraverso un intermediario una “buona uscita” (per approfondire leggi un articolo del Wall Street Journal), una piccola somma (di circa 1000 dollari) per lasciare volontariamente la casa in buone condizioni. La proprietà spesso deve essere pulita (a volte bisogna fare delle piccole riparazioni) prima di essere venduta. Inoltre c’è un periodo di tempo da calcolare per mettere in vendita la casa e finalizzare la vendita. In rapporto alle condizioni del mercato e alla tipologia di casa, la banca dovrebbe ricevere circa il 50-60 % del mutuo, circa un anno dopo il primo mancato pagamento. Come già messo in evidenza, i casi di frode possono ulteriormente ridurre il rendimento per la banca. Un tipico caso di frode è quando la casa viene venduta più volte tra diversi acquirenti, spesso grazie all’aiuto di un perito, un broker di banca o un assicuratore. Il signor Jones compra una casa per 100.000 dollari, la vende al signor Johnson per 200.000 dollari, che a sua volta la vende al signor Jones per 300.000 dollari (coinvolgendo il meno possibile terze parti). Il signor Jones poi chiede alla banca di accendere un mutuo per finalizzare l’acquisto e chiede a prestito 250.000 dollari che risulta essere un mutuo prudenziale sul valore della casa di 300.000 dollari. Il denaro viene diviso poi tra Jones, Johnson e gli altri “complici”. Non verrà mai pagata nessuna rata del mutuo. La banca si riprende la casa e può metterla in vendita a 100.000 dollari (ammesso che almeno questo prezzo fosse congruo…), non potendo così coprire il mutuo di 250.000 dollari, cosicchè alla fine la banca arriva a riprendersi solo il 10-20% del mutuo erogato. Post from: Capire il Mercato
• 

  Cash for Keys

  http://audiblesmirk.wordpress.com/2008/05/20/cash-for-keys/
  65 days ago in Audible Smirk · Authority: 24

  “Cash for Keys” refers to the concept of paying somebody to leave a property that they don’t own, for the purpose of getting them to leave. In other words, you have to pay squatters to vacate. There are two reasons for doing this. The first is for former property owners who are going through foreclosure proceedings. As a parting gift, the mortgage lender will pay the foreclosees for not trashing the property. As noted below, there are realtors who advise people to ask for “cash for keys” and there are brokers that specialize in setting up the deals. The second to get people who are renting (or squatting) on the property (likely foreclosed properties) to leave. This is easier and cheaper than going through eviction proceedings throught the courts. There is also the possibity that the squatters don’t believe that they are squatters, because some fraudster claimed to own the property and has ‘rented’ it out to them. Here are some articles I thought were useful on the subject: Cash For Keys: Banks Paying Delinquent Borrowers So They Don’t Trash The House In MN the bank can’t evict the tennants until 6 months after the foreclosure sale. This is called the ‘redemption period’, which by MN law allows the original buyer a chance to buy back the property. The buyback almost never happens (since no bank will give a loan to someone who just defaulted) so it basically just gives a free 6 mo period to squat and trash the place. Banks Pay People Off To Deter Home Rage; Mr. Buompensiero, a gray-bearded inspector for REO Asset Services-1st Realty Group, rang the bell. When no one answered, he taped a letter to the door offering the occupants $1,000 to move out. The catch: They won’t get a cent if they trash the house before they leave. “If it was me, I’d take the money,” Mr. Buompensiero said as he drove away. Either way, they’re “going to get thrown out in a couple of weeks.” Squatting is on the rise across the United States as foreclosures surge, eviction notices mount and homes go unsold for months, complicating the worst U.S. housing slump in a quarter century and forcing real-estate brokers to enlist the help of law enforcement and courts to sell empty houses. In some regions, squatting is taking on new twists to include real-estate scams in which thieves “rent out” abandoned homes they don’t own. Others involve “professional squatters” who move from one abandoned home to another posing as tenants who seek cash from banks as a condition to leave the premises — a process known by real-estate brokers as “cash for key.” “There are people who move in and know exactly who to contact and say ‘If you want this house, why don’t you come out here and offer me cash,’” said Detective Erin Camphouse of the Los Angeles Police Department’s Real Estate Fraud Unit. “It’s just cheaper for the banks to do that rather than going into the courts,” she said. “The squatters are getting sophisticated and turning it on these banks who own the properties.” California real-estate broker Steve Smallson said he finds about three squatting cases a month, compared to none last year, in his region of Woodland Hills, a middle-class district of Los Angeles. That includes a case in April involving a foreclosed home worth $1 million where police were called after neighbors reported squatters filming pornography in the house. Squatting rises in U.S. along with foreclosures Such cases of squatters’ posing as tenants are on the rise, said Bill Collins, president of the New Jersey chapter of the National Association of Real Estate Brokers. “These people claim that they have a lease but they can’t find it,” Collins said. “And the property owner has been removed from the property or been foreclosed on, so they have no interest in confirming if this person is a valid tenant. So now you have squatters who are assuming that they are tenants and have rights to some degree to stay in the property until we can go through the court system to get them out.” And they have heard that what most of these banks are doing is giving “cash for keys,” or payments for quitting the property, that can range from $1,000 to $1,500, he said. Pittsburgh Lenders normally do not have staff whose job is to sell foreclosed properties, said Walker, who normally sells between 15 and 20 of these houses per month. After she agrees to sell a property, Watkins and Truong step in to put it in shape to resell. About nine out of 10 foreclosed houses are in need of repair or cleaning, Walker said. Once the lender assigns a house to Walker, she checks it within 24 hours to determine if it is still occupied. If it is, she offers the occupant a “cash for key” agreement in hopes of eliminating any eviction action. The amount of cash is based on the local market rental rate. If the owner refuses, the lender must file for an eviction, which could take two or three months to occur, during which time the occupant lives free on the premises. “We find a lot of occupants decline the offer and remain on the premises,” Walker said. Realtors and services: http://www.asaprealtor.com/reo-services.html We provide professional cash for key negotiations, eviction assistance and follow up, property preservation, weekly inspections, weekly property status reports, aggressive, marketing, professional escrow follow up, closing. We have a very successful eviction ratio with our aggressive CASH FOR KEYS approach with tenants, we know time is money and occupants can stand in a way of maximizing return. We also provide close follow up with the eviction process and have showed up in court with our clients appointed attorneys, we believe that this is the most important role for the real estate broker in the REO process. http://www.flatironrealty.net/Foreclosure/page_1783385.html 10 Basic Steps to Avoid Foreclosure: If you have already been foreclosed upon and are still occupying the property, ask the mortgage company about CASH FOR KEY.
• 

  links for 2008-04-22

  http://janilope.com/2008/04/22/links-for-2008-04-22/
  93 days ago in Janilope · No authority yet

  KINKY NEWS NETWORK - New York Post “…the officer at the scene was able to ID the drug because of “his prior experience as a police officer in drug arrests, observation of packaging which is characteristic of this type of drug, and defendant’s statements that . . . ‘I’ve got some meth in (tags: Weird Sex News) 24 Hours on the ‘Big Stick’ “They’re not just running against the hero John McCain, they’re running against heroism itself and against almost everything about America that ought to be conserved.” –PJ O’Rourke on real Americans vs. Hilllary and Obama (tags: Election Hillary Obama) Buyers’ Revenge: Trash the House After Foreclosure Nasty bastards. What did they think an adjustable loan meant? Hint: It never goes down. (tags: Assholes)
• 

  Foreclosure: What happens when people can’t pay their mortgages

  http://understandingthemarket.com/?p=31
  93 days ago in WELCOME : Understanding the Market · Authority: 6

  How much does a lender lose when a homeowner stops paying a mortgage? Approximately half the value of the mortgage, assuming there was no fraud. This essay will sketch out how the foreclosure process works in the normal case and in the less common case of fraud. The argument presented below is a simplification of the actual process that I believe captures the important aspects; if you have any questions or find any errors please contact me here. The typical story (at least in the popular media, see here or just google for foreclosure) of a homeowner who cannot pay his mortgage goes something like this: an otherwise model citizen (let us call him Mr. Smith) goes to the bank to borrow money to buy a house. Mr. Smith does not carefully examine the paperwork that he signs when he gets the mortgage. Perhaps someone at the closing told Mr. Smith what a mortgage lender once told me when I was examining mortgage documents, about the “Golden Rule”: he who has the gold makes the rule. In other words, sign the papers now or cancel the mortgage and come back on another day. (When one reads a bit more about Mr. Smith it might occur that he has just bought several new cars and taken an exotic vacation, or that he was “persuaded” by his banker to exaggerate his income in order to qualify for a mortgage on a much more expensive house than he might have otherwise been able to afford; in many cases, the blame for the poor choice of mortgage can be apportioned across a number of actors.) In any event, Mr. Smith finds that after a year or two of low, affordable payments, his payments are now much higher. Mr. Smith apparently agreed to an option ARM (such as this one) that allowed him to make small payments but now demands a payment that he is unable to make. Mr. Smith has very little equity in his house (perhaps he took out a 95% mortgage or even more, and his first few payments were interest-only). After Mr. Smith misses each payment the bank sends him a letter, and after three or four missed payments the bank gets a court to declare that Mr. Smith is in default and the bank now has the right to evict Mr. Smith and sell the house. Mr. Smith may try to sell his house, but finds that the amount that he would net from a sale is somewhat less than he would owe the bank; part of this gap may be due to an inflated price paid by Mr. Smith, part due to a drop in prices since Mr. Smith purchased his home). (Years ago, a local banker might have visited Mr. Smith and tried to work out a program to help him; today, Mr. Smith’s loan might have been sold several times and he may be paying a servicing agent in another state with whom he had no previous relation. Again, a personal anecdote; once I had a mortgage that was resold once or twice; the eventual owner of my loan called up to offer to refinance my loan at a lower rate. But after a few questions is turned out that this lender did not make the kind of loan that I had. I eventually refinanced with another lender, but if I had been having financial difficulties it may have been impossible for that lender, who had bought my loan, to renegotiate the conditions of my loan.) One possibility (before the bank forecloses) is for Mr. Smith to arrange a “short-sale”, in which he sells the house to a buyer for less than he owes the bank. The bank must establish that Mr. Smith has made a good faith effort to sell his home and that he actually is in a difficult financial position not as a result of his own excessive behavior. A short-sale is difficult if Mr. Smith has multiple mortgages against the house, because the holder of the subordinate claim (the “second” or junior mortgage) will not receive anything until the first mortgage is paid off. If both mortgages were from the same lender, then there is no conflict. But if multiple lenders are involved it is hard to solve this problem. The advantage (for the bank) of a short-sale is that the home is likely to remain in good condition and the bank will likely recover something like 70% or more of the mortgage. However, if a short-sale is not possible, the bank must take ownership of the property (foreclosure) and sell it. Once the bank owns the house it must pay the relevant expenses (taxes, condo fees, lawn care fees and so forth), but it may take some time for the bank to remove Mr. Smith from the house. If Mr. Smith does not leave voluntarily, the bank can offer him (through an intermediary) “cash for keys” (see a Wall St. Journal article here) a modest payment (perhaps $1000 or so) in return for voluntarily leaving the property in good condition. The property often must be cleaned up (and sometimes be repaired or have certain fixtures replaced) in order to be sold. There will be additional time to market the property and complete the transaction. Depending upon the local market conditions and the nature of the home the bank should receive around 50 to 60% of the mortgage around a year after the first missed payment. As noted above, the case of fraud can further reduce the return for the bank. In a typical fraud case the property will be flipped several times between buyers, often with the cooperation of an appraiser, a bank loan officer or an underwriter. Mr. Jones may buy a house for $100,000, sell it to Ms. Johnson for $200,000, who in turn sells it again to Mr. Jones for $300,000 (without much in the way of involvement of outside parties). Mr. Jones will then go to the bank finance this purchase and borrow $250,000 which would appear to be a conservative loan against a $300,000 house. The money will be divided between Jones, Johnson and their confederates. No payment on the mortgage is ever made. The bank forecloses and winds up with a $100,000 home (if even that price was a fair value) that must be sold and will not be sufficient to cover the 250,000 mortgage, so the bank’s return could be as low as 10% or 20% of the mortgage amount. Post from: Understanding the Market
• 

  Doom and gloom update

  http://www.mikeshaw.net/?p=1280
  115 days ago in Mike’s Weblog · Authority: 8

  First, this haunting video of the destruction of those chocolatey, pagan delights…. Then…the bad news. The baby boomer lifestyle and value system isn’t working out so well for some. (No offense to decent baby boomers…I wish a Harley and hang-gliding retirement to you all.) Some people are trashing foreclosed houses before they leave. Equity loans are looking ugly. And the people who ran this show? They’re getting millions. Meanwhile, we seem to be papering over this economy by giving giving a big ol’ credit card to anyone who needs it. By “anyone” I mean anyone who mismanaged a minimum of several billion dollars. By “needing it” I mean they can show that revealing what doofuses (doofii?) they are would cause “perception” problems for one of the markets. Crisis of confidence? How about a crisis of abandoning anything that resembles an economic system of any kind? How about a crisis of making this junk up as we watch the futures? All this paints a picture of a very dysfunctional rehab clinic. Have you wrecked your life by smoking crack? Here’s a big credit card that will keep you propped up…you know…until you get back on your feet. Just make sure you dress up nice and don’t look like you’re on crack. By the way, skim all the personal money you want off that puppy, you incredibly competent bonus worthy executives. How do you think this is going to work out? Sooner or later all this oh-so-important debt is gonna come due. Do we really think the people controlling all this money know what they’re doing? Do we really think they have our best interest at heart? The thing about capitalism is that it tends to turn our selfish nature into a material advantage for us all. But it doesn’t make us care about each other. Now that they’re quietly throwing capitalism out the window, isn’t it a bit scary to think that underneath it all “they” really don’t give a rip about “us”?
• 

  Cash For Keys: Banks Paying Delinquent Borrowers So They Don’t Trash The House

  http://mortgage-buy-home.com/2008/03/28/cash-for-keys-banks-...
  118 days ago in Mortgage Buy Home · Authority: 1

  Article and video from the WSJ, Buyers Revenge: Trash the House After Foreclosure. These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. This can obviously cost thousands of dollars to fix before re-sale. The solution? Payola. The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. The moral: Never underestimate the goodwill engendered by a fat stack of cash.
• 

  Cash For Keys: Banks Paying Delinquent Borrowers So They Don't Trash The House

  http://www.behindthemortgage.com/behind_the_mortgage/2008/03...
  118 days ago in Behind The Mortgage · Authority: 197

  Article and video from the WSJ, Buyers Revenge: Trash the House After Foreclosure. These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. This can obviously cost thousands of dollars to fix before re-sale. The solution? Payola. The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. The moral: Never underestimate the goodwill engendered by a fat stack of cash.
• 

  Cash For Keys: Banks Paying Delinquent Borrowers So They Don’t Trash The House

  http://mywaylending.com/2008/03/28/cash-for-keys-banks-payin...
  118 days ago in My Way Lending | Home Loan & Mortgage Information · Authority: 3

  Cash For Keys: Banks Paying Delinquent Borrowers So They Don’t Trash The House March 28, 2008 By: Alex Stenback Category: Uncategorized Article and video from the WSJ, Buyers Revenge: Trash the House After Foreclosure. These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. This can obviously cost thousands of dollars to fix before re-sale. The solution? Payola. The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. The moral: Never underestimate the goodwill engendered by a fat stack of cash.

Advertise on Technorati