Why Foreclose

@p1kef1sh (45640)
February 18, 2010 11:50pm CST
As I understand it there are many towns in the US that now have an alarming number of foreclosed properties for sale. The people that originally bought these houses were forced out onto the streets, shelters, cars or into rented accommodation. This is just an idea but presumably the mortgage companies are now left with a stock of housing that they can't sell on and which will slowly dilapidate. Why not foreclose, but then leave the current occupiers in place paying a notional rent rather than mortgage. Once things pick up then they offer the mortgage back again. Am I missing a vital piece here? Surely tenanted housing stock is better than adding to burgeoning public costs. Plus towns remain populated and with the worry of a roof over their heads gone folk can concentrate on getting their local and therefore the national economy going again.
12 people like this
23 responses
@littleowl (7157)
19 Feb 10
Hi p1ke, Personally I think the whole system has gone mad-why on earth turf people out of their homes when there could be somesort of help they could give to them to help them stay housed in their own homes...we do it here rather than evict cos it costs more to evict and find another place to live for one person/family than to let them stay put and sort it out from there-the whole thing is madness to me and in a sense am sooo glad I dont live in the US-England may have its faults but much rather live here than anywhere else..hugs LoLo
3 people like this
@p1kef1sh (45640)
19 Feb 10
We think as one on this LoLo. XXXX
2 people like this
@BarBaraPrz (19846)
• St. Catharines, Ontario
19 Feb 10
Ah, p1key, you look lovely with those stars in your eyes... Banks aren't in the business of helping the economy. They're in the business of making money for themselves, and as much of it as they possibly can. And they no doubt get tax breaks for carrying all those empty, foreclosed properties.
2 people like this
@p1kef1sh (45640)
19 Feb 10
Some banks are doing this apparently. The banks are afloat because of our money. Therefore they do have an obligation to society more widely. Left to me they'd have gone to the wall. But then I'm a sod when it comes to bankers. Lower than second hand care salesmen and lawyers even!
3 people like this
@BarBaraPrz (19846)
• St. Catharines, Ontario
19 Feb 10
Second hand care... must be really bad...
1 person likes this
• Atlantic City, New Jersey
19 Feb 10
Great idea, but let us not forget that the mortgage companies are the criminals who put the people in this mess by scaming them into the balloon interest rates that they knew were not affordable but went ahead and let the poor schumuck sign for the house anyway- knowing they were going to rip it back in three years!!! Luckily when we bought our home we were very aware of these "great" offers of balloon interest rates and when offered one (even though it made the initial payments less) we said ABSOLUTELY NOT! Because we were aware that the there was a huge posibility of our mortage jumping from $1100.00 a month to $1700.00 in a few years time. Unfortunatley many of the people hit with these "balloon interest rates" were first time home owners who did not know any better. It pays to be educated in any subject before entering any type of deal!
2 people like this
@p1kef1sh (45640)
19 Feb 10
Some of the deal were too good to be true and like most such things that's what they have proved to be. Te problem is that some poor family is destitute because of it.
2 people like this
@laglen (19782)
• United States
19 Feb 10
Investors are buying these foreclosed homes. Also, if you were low on money and knew that if you stopped paying, you could stay anyway, would you?
@p1kef1sh (45640)
19 Feb 10
What investors? Who will they sell didlapidated homes too. Sure if you live on Ocean Boulevard then forget it. But in Nowheresville Michigan or Illinois there's no incentive to buy foreclosed stock for investment at all. Your "renter" got pushed out of the door when they foreclosed.
2 people like this
@pandaeyes (2068)
19 Feb 10
The mortgage company would rather have the trickle of money coming in. I think if it were policy to keep them on as tenants and then re offer the remainder of the mortgage, you would have more people defaulting on their mortgage payments. There has to be a hard consequence to missing the payments. Sometimes banks will offer a mortgage with a mortgage holiday where the person making the payments can stop for 6 months and then resume at the end of that time but I think the interest is continually added none the less. People can always approach the lender and explain a difficulty because the lender would rather continue the arrangement but just extend the length of repayment years. I can see what you mean, it is in everyone's interest if the people who are made homeless are left in housing and can resume where they left off ,if they can pick themselves back up.
2 people like this
@p1kef1sh (45640)
19 Feb 10
I'm not saying that this is a soft option. You still lose your home, it's just that you have an opportunity to regain it at a later point.
2 people like this
@gabs8513 (48716)
• United Kingdom
19 Feb 10
P1ke I have wondered this to here in the UK as well I know there are Companies here that buy your House and let you rent it but and I mean but they are also a rip of in a way as I tried that 4 years ago and they do not do as they say and it is quite Complicated so I agree with what you are saying there But then these Companies will say, we are a Mortgage Company not a Letting Company they do not look at the fact that at least they have Money coming in xxx
2 people like this
@p1kef1sh (45640)
19 Feb 10
They see it as a breach of trust Gabs. But whilst they would see a reduction in income, at least they would still get something and the mortgagee would still have "their" property. XXXX
1 person likes this
@bdugas (3581)
• United States
20 Feb 10
I agree there should be a way for these people to save their homes, even cutting the mortgage in half untill they can get back on their feet would be better than a house sitting empty to go to he*ll whith no one in it. Too many jumped into houses that they could not afford to start with, that is the main problem. But these empty houses are growing by the month, and does not do a town good for someone looking to move to their city. I do know some that are getting some real bargains now that others have lost their homes. Will things pick us is my question, don't seem like it where I live. My daughter has to go to child support a lot to try and collect what is owed to her kids, it is in the building where they do medicaid and food stamps, the line is getting longer by the day, seems mortgage companies don't care what happens to you or the property, once you get behind. If you couldn't afford the payment now, could you in the future. If people bought what was in their means, that they could afford, some would not be in this mess. I know what it is like to lose a home, not to forcloser but to storms, and you work long and hard to get where you are. finally saying I can't do this any more must hurt very badly. I thought Obama had it all fixed to help these people, where is he, haven't talked to one yet that says he has gotten help.
1 person likes this
• United Kingdom
20 Feb 10
While I agree with much of what you are saying, I think it is important to remember that not everyone in such a situation brought in on themselves. I mean, you say they shouldn't have bought beyond their means. Of course, this would be the case with some but many people DID buy within their means and have been affected by unforeseen circumstances such as losing the jobs they thought would pay their bills.
@bdugas (3581)
• United States
21 Feb 10
Sorry I stand corrected, yes many did and I should not of said that the way I did, we had a company just down the road been there for years, in fact just about the only real work in the community and it closed and moved overseas. And I imagine a lot are struggling to keep their homes now. There should be something in place to help these people. ones that have worked all their life in one spot and it just pack up and leave. One woman got $8,000 for her nearly 20 years there. Wow, to many places closing and going overseas, where the taxes are not like they are here.
@p1kef1sh (45640)
22 Feb 10
I won't be drawn on Obama's policies, I try not to do other countries politics. But it does seem to me that this has to be at least worth consideration.
@RawBill1 (8542)
• Gold Coast, Australia
19 Feb 10
Most of the time it is the simple things that work the best! I think these politicians over there are probably complicating things too much and have probably not thought of something as simple as that! Perhaps you should move over there and take over leadership of the country! I reckon you would do a great job.
@p1kef1sh (45640)
19 Feb 10
Thank you but I'd stop a redneck bullet within a month! I'm far to "socialist" for many Americans. Of course most of them don't know what socialism actually is. LOL.
2 people like this
• Atlantic City, New Jersey
19 Feb 10
No need to put all "us" americans in the same pot there p1kef1sh
@RawBill1 (8542)
• Gold Coast, Australia
22 Feb 10
Yeah, when I was in the USA I did meet loads of Americans over there who did not agree with the US government's capitalist greedy ways! I am sure the governments do not understand what socialism is, probably think it is communism!
@mtdewgurl74 (18118)
• United States
19 Feb 10
I absolutely agree wholeheartedly!!Why aren't you our president? With whits like that it would be great to have you as our president..It would be the smartest thing to do..but sadly there is to many people without this common sense.
1 person likes this
@p1kef1sh (45640)
19 Feb 10
LOL. I'm far too "socialist" to last more than a nanosecond as President Becky. LOL. Thank you though.
2 people like this
@mtdewgurl74 (18118)
• United States
5 Aug 10
Yeah, me either. It sounds like fun, but it isn't. It is harder then what people think it is.
@KrauseHome (35034)
• United States
24 Feb 10
The biggest issue is when they forclose on homes is so many people tend to destroy the homes before moving out to where there is a lot of work needing to be done instead of having a nice home someone would be interested in. And since property values are still declining due to no jobs in a lot of areas, this makes you wonder what will become of some of these for sure. I have seen homes on the market for a couple of yrs. now left unmaintained to where no one would ever want them, and then they are left alone still as well. You could be onto something here, but unfortunately I cannot see anyone bigger in office thinking this way. But you never know.
1 person likes this
@p1kef1sh (45640)
24 Feb 10
The people that smash up the homes tend to be the disgruntled foreclosed mortgagee. But if they are staying put then they are less likely to wreck the house. Apparently there have been some successful trials in one or two places so I am not along with the thought!
1 person likes this
@nannacroc (4049)
20 Feb 10
You'll never get anywhere in banking or politics. It's a great idea and makes perfect sense.
1 person likes this
@p1kef1sh (45640)
22 Feb 10
I shall write a thousand lines: "I must try to be greedier"!
1 person likes this
@jakill (835)
19 Feb 10
It does sound like a good idea, and I was heartened to hear from one of your responders that it is happening sometimes. Another problem will be that because the value of the homes has dropped so much some people with negative equity still owe their lenders a fortune even though their houses have been repossessed. The debt is not always extinguished. Of course if it is left to the corporations, some would do it and some not, having different opinions about what will be best for them and their shareholders and stakeholders. If the local or state authorities were involved, it might be a different matter.
1 person likes this
@p1kef1sh (45640)
19 Feb 10
I think that it would be hard to legislate for this but there might be "sweeteners" provided by Government at whatever level.
1 person likes this
@bhanusb (5709)
• India
19 Feb 10
We usually think US is a country of affluence.People from many countries migrate there in search of fortune. Some of them become successful. But most of them can't able to comeback to their countries for want of required money. You revealed another picture of America's shattered economy.
@p1kef1sh (45640)
19 Feb 10
It is very sad to see too Bhanusb.
1 person likes this
@mari61960 (4895)
• United States
19 Feb 10
Sounds like a great idea...however.. How many people will just not pay their mortgage at all when things get rough. Telling themselves well it's ok, when they take it back over I'll just pay rent for a while and then buy it back...lol It sounds good at first but I think it would just cause more problems. The cost of houses is ridiculous these days. Many banks financed houses for more than they were worth in the past few years and that is a big problem too...you can't even get what you owe many times. There are so many problems there needs to be many fixes. But I agree if something like that could be worked out it would help in many instances as long as it isn't abused by lowlife freeloaders.
@p1kef1sh (45640)
19 Feb 10
It would have to be regulated and carefully monitored. But most home owners tend to look after their property and are distraught at having to leave. This might give them an incentive to work harder at finding work or even creating work! But I guess that the companies would know who the best bets are anyway and offer accordingly.
1 person likes this
@spalladino (17925)
• United States
19 Feb 10
Some mortgage companies and banks have made this type of arrangement with homeowners who were unable to pay their mortgage payments...and it is a good idea that I wish more would adopt. Sometimes the only problem is that the mortgage was an adjustable rate one that adjusted up to a cost the homeowner could not afford. It only makes sense to rent the property to the homeowner until they can obtain an affordable loan. I live in Florida, which has been particularly hard hit by foreclosures. We're having a problem with these vacant homes that are being vandalized, with unkept yards that are attracting snakes and rodents.
@p1kef1sh (45640)
19 Feb 10
If they had tenants in them, especially the folk that "own" the house, then those unkempt yards ought to decline. I am pleased that some companies are doing this.
1 person likes this
• Canada
19 Feb 10
The whole point of foreclosing was because they were not paying their monthly mortgage payments, so can they even afford rent? Besides,a tenant would have to be approved via a credit check, and that bank has already deemed them a bad risk with bad credit, so they are a bad risk. Plus, when a property is up for sale, and there are tenants involved, the landlord must give them 60 days notice to move if someone wants possession. Many buyers won't put an offer in on a property unless they can decide on the closing date, and often it is sooner rather than later. Thus, the house must be unoccupied so that the new purchaser can stipulate the closing (purchase) date to coincide with their current move out date on the place they are living in now. The bank wants the property to be available for transfer (closing) as soon as possible. They do not want to have to wait for a tenant to move out. And sometimes the tenants don't move out even when given proper notice. So, a legal battle will ensue, costing the bank money and valuable time when they could possibly have sold the property already.
@p1kef1sh (45640)
19 Feb 10
You are looking at the "now" Annie. I am talking about for the future. My point really is that it seems wasteful to the point of criminality to make people homeless and then allow the asset that you have just regained from them fall down. At the same time, those people become dependent on the State and not themselves. If they are worrying about somewhere to live they will not be able to give work proper consideration. I am not suggesting giving them anything, just making life a little more sensible for everyone. They can't sell the properties anyway, that's why they are collapsing.
2 people like this
• Canada
19 Feb 10
Well, I guess at the time when they foreclosed the bank thought that they may sell it quicker before it got dilapidated. Just like, at the time when the purchasers bought the place and agreed to the price, they thought they could afford the payments. Maybe in these difficult financial times, the banks should just let the people work through their hardship, by paying a minimal fee or interest only for awhile until they get back on their feet. This would prevent the foreclosure from happening and give the 'owners' reason to repair and keep the property up in good conditon since they still have a vested interest in it. Tenants don't care. Or the bank should have just taken it's loss, and sold the place soon after foreclosure prior to it becoming dilapidated. Otherwise, if the bank is waiting for the market price to go back up, so they can actually get their money back, then they had to make a turning point decision at some point. Either let it go, at a loss and be done with it, close the file. OR, keep the repairs up, until the market resumes and keep it in saleable condition. I agree, it is almost criminal.
1 person likes this
• Canada
19 Feb 10
Sounds like the banks are just being too arrogant. They would have been better to have worked with the 'owners' to allow them to keep their home and keep some sort of payments coming in, however minimal to prevent all the costs associated with a foreclosure. Didn't some banks also recive bailouts?
1 person likes this
• Netherlands
26 Feb 10
P1key you are unfortunately missing one very important aspect in this discussion that you have started about foreclosed properties and housing and that is that You, My Dear Man, are thinking rationally and logically which is a lot more than I can say for the fools that Do foreclose on the properties! Anyone with one eye and half sense would do as you propose, but then again that would mean that they were thinking logically which brings us right back to my original point!! There is a word that we use for acts such as foreclosing on properties and letting them dilapidate instead of keeping them occupied, keeping them in good condition and making a few bucks at the same time and that phrase is... STUPIDITY!
@p1kef1sh (45640)
26 Feb 10
Stupidity and greed I think GEL. To some corporations if they don't see an instant profit then they don't believe that there is any point in pursuing a project.
• Netherlands
2 Apr 10
I could not agree with you more P1key! Wouldn't you think that the big corporations would finally figure out to take their blinders off and see the "BIG PICTURE"? Makes me wonder just how smart these Big Boys and Girls running these Big corporations really are! XXXX
@MsTickle (24962)
• Australia
23 Feb 10
I'm with you...why leave your home? Why have all those empty houses? It seems most sensible to do as you say and it's a win/win situation.
@p1kef1sh (45640)
24 Feb 10
So I am not entirely daft then? LOL.
1 person likes this
@MsTickle (24962)
• Australia
24 Feb 10
Not entirely....heheh.
• United States
19 Feb 10
Well see first that would only make sense to us people who are on the house owner side... as it is the banks seem to not understand common sense. I have a relatively large family..we have had a couple people in our family lose there house and walk away as well...because the banks wouldnt work with them. We have had this discussion many times when we have get togethers on the banks and the government and how things should be handles but then we are common folk who live with common sense... not in the world of finance where they apparently know more than we do!! I am from Michigan and yes, we are one of those US states that is being hit hard with the foreclosure market at the moment. I live in a house that my parents bought for us a couple yrs ago and we pay them our rent so I am lucky in that aspect that my parents are my landlord --not a bank. Hope all is well with the housing market in your area!! Happy Mylotting.
@p1kef1sh (45640)
19 Feb 10
We are OK thanks. But the banks need to start to do their bit. They have tried take take take and it plunged us all into ruin. My big fear is that now they have been bailed out by governments they are going to think that they can go on as before.
• China
20 Feb 10
A company has its own cash flow to maintain,and that's why we develop financing management.When facing with the exhaustion of net interest inflow,the mortgage providers have to sell some of the "none-performing assets" so as to make both ends meet. What you proposed is just like the re-structure of debt.It is commonly organised by government,or,sometimes initiated by lenders with abundent cash flow and not willing to sacrifice long term profit. I am from China.I am watching US property marketing with the sight of an outsider.I am planning to invest in real estate in America.
@GreenMoo (11842)
20 Feb 10
Your idea sounds far too logical, sensible and people orientated for a mortgage company to pick up on! However, the ex-mortgage holders may not be the best tenants from the mortgage company´s perspective as landlord. I guess a good few would carry a healthy sized grudge against the mortgage company which foreclosed on them, which smashing up a property the mortgage company now control might just help lighten. I looked at allot of repossessed properties when I was looking to buy my first home, and a large proportion of them had been smashed up by the outgoing mortgagees. Allowing a housing association to manage the properties would definately be a more sensible option than allowing them to stand idle though. Properies deteriorate very quickly when they´re empty, and no-body wins.
@p1kef1sh (45640)
22 Feb 10
I think that the company might have to be selective to whom it offers the tenancy, but many people would want the chance to stay in a house that they love in the knowledge that it is likely to be theirs again once they have their lives sorted out and not destroy it therefore. As I said, it's just an idea.