Americans face post-foreclosure hell as wages garnished, assets seized

[mfcorey1]

By Michelle Conlin

NEW YORK (Reuters) - Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets.

By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago.

Using a legal tool known as a "deficiency judgment," lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way.

http://news.yahoo.com/americans-face-post-foreclosure-hell-wages-garnished-assets-053048943.html

[alcibiades_mystery]

1. These fucking banks and courts are ridiculous

They put value at risk through the loan as well. The house IS THE COLLATERAL. If it goes down in value, then so be it. Any other mortgage contract is unconscionable. I'm so sick of these fucking lenders acting like they can loan at interest but have no conceivable chance of losing money in those loans. No you fuckers! The only justification for the interest is your risk of fucking loss.

I hate them like poison.

[dixiegrrrrl]

8. It ain't the banks, in this case, as the article clearly states.

Three of the biggest mortgage lenders, Bank of America, Citigroup, JPMorgan Chase & Co and Wells Fargo & Co. , all say that they typically don't pursue deficiency judgments, though they reserve the right to do so.

It's Fannie Mae.

Perhaps the most aggressive among the debt pursuers is Fannie Mae. Of the 595,128 foreclosures Fannie Mae was involved in – either through owning or guaranteeing the loans - from January 2010 through June 2012, it referred 293,134 to debt collectors for possible pursuit of deficiency judgments, according to a 2013 report by the Inspector General for the agency’s regulator, the Federal Housing Finance Agency.

[nolabels]

2. Wall street banks making the money when things go up.......

and when they go down. You don't really have to wonder why casinos and banks take your money and keep it. Really all you need to know is when see them, just taking that long contemplative gaze and at the end results to see who their real backers are, crooks and politicians.

It's not rocket science

[Unknown Beatle]

6. Crooks and politicians.

That's redundant.

[cate94]

3. This sickens me.

I am so fed up with thieving bankers. They are the ones who caused the problem but continue to screw the people that they hurt.

[Recursion]

4. Wait... deficiency judgments after a repossession? I've heard of them after short sales

but after a repossession?

[Crabby Appleton]

10. Depends on the state the borrower lives in

there are recourse and non-recourse states

From IRS

Recourse vs. Nonrecourse Debt

There are two types of debts: recourse and nonrecourse. A recourse debt holds the borrower personally liable. All other debt is considered non recourse.

In general, recourse debt (loans) allows lenders to collect what is owed for the debt even after they've taken collateral (home, credit cards). Lenders have the right to garnish wages or levy accounts in order to collect what is owed.

A nonrecourse debt (loan) does not allow the lender to pursue anything other than the collateral. For example, if a borrower defaults on a nonrecourse home loan, the bank can only foreclose on the home. The bank generally cannot take further legal action to collect the money owed on the debt. Whether a debt is recourse or nonrecourse may vary from state to state, depending on state law.

If a lender cancels a debt and issues Form 1099-C, the lender will indicate on the form if the borrower was personally liable (recourse) for repayment of the debt. The tax impact depends on the type of debt - recourse or nonrecourse.

http://apps.irs.gov/app/vita/content/36/36_02_020.jsp

[blkmusclmachine]

5. "Savvy!"

[Hoppy]

7. Another strategy is to claim it as income to the lender for tax purposes.

Then the bank gets a write-off and the debtor gets an I.R.S. bill.

[Live and Learn]

9. Yep, that is even more common.

The poor get screwed in multiple ways. They never tire of trying to suck that blood out of a turnip. And as for America giving people a second chance or privacy. Dead concepts.

[DebJ]

11. Another issue I have with this is that the MORTGAGOR controls how much the repossessed unit is sold

for, leaving the mortgagee with no choice as to how much debt is left on his/her/their shoulders.

I was forced to foreclose in the mid 1990s, which likely would not have happened had the lender been willing to
work out ANY type of payment plan other than: all amounts past due in full immediately, or we take no payments
at all from you and sock you with a continuously increasing amount of fees for late payment and interest. I loved
that part: we refuse your money, and we then charge you enormous late fees, and interest on those fees. I had
lost my job at the time.

I was completely stunned when I saw that the mortgage company then took a $30.000 bath on the sale price
of the unit (a condo)...sold it for like 30 percent below market. They lost far, far more that way, than they would have had they simply allowed me to
work up a payment plan over the course of the next 12 months for my three months of payments.

If they were to then come after me, I think I'd have the urge for serious vengeance.

On Edit: This sale caused me to have suspicions that someone inside the mortgage company had cut a deal and bought the
unit for themselves, a bonus or benefit. It made no sense. The housing market was healthy at the time.

[belzabubba333]

12. tag

[mb999]

13. The trillionaire bankers get bailed out

but the rest of us get "trickled on" by them and lectures of "responsibility" by the klanservatives. Donald Trump can shuffle the debts under a corporation and bail out when things get bad. We get serfdom. People need to revolt against this corporate crapitalist system as a whole before we end in slave camps.

[Autumn]

14. The bankers got bailed out.

[Octafish]

15. Tim Geithner sacrificed homeowners to “foam the runway” for the banks.

Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, has published a new book, “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” It presents a damning indictment of the Obama administration’s execution of the TARP program generally, and of HAMP in particular.
…
By delaying millions of foreclosures, HAMP gave bailed-out banks more time to absorb housing-related losses while other parts of Obama’s bailout plan repaired holes in the banks’ balance sheets. According to Barofsky, Treasury Secretary Tim Geithner even had a term for it. HAMP borrowers would “foam the runway” for the distressed banks looking for a safe landing. It is nice to know what Geithner really thinks of those Americans who were busy losing their homes in hard times.

CONTINUED w VIDEO and links and more letters...

http://washingtonexaminer.com/video-geithner-sacrificed-homeowners-to-foam-the-runway-for-the-banks/article/2502982