Foreclosure: Does This Family Deserve To Lose Its Home?

[XanaDUer]

SNIP - ALAMOGORDO, N.M. -- From next to the dead tree in his backyard, Ernie Soto can see the big house where he used to live. It's perched on the side of a mountain overlooking Alamogordo, a town of 36,000 on the eastern edge of New Mexico's Tularosa Basin...

A guy moved into the bigger house in a rent-to-own situation, Soto says, but the guy died. Then Soto's daughter got sick. He gave up trying to start his business when financing fell through. Then he lost his job. And now he's fighting to keep the smaller house.

He's a conservative Republican, but he thinks he deserves a break, a little leniency, so he can keep his home even though he hasn't made a mortgage payment since 2009.

Soto's congressman, a conservative Republican who's voted to repeal the government's anti-foreclosure programs, has shown sympathy to his constituent by helping him apply for one of those programs.

http://www.huffingtonpost.com/2011/10/17/foreclosure_n_1015918.html

Let's hope this is a learning situation, as well.

[TBF]

1. I don't think any families should be losing their homes -

I'd like to see nationalization right now to take over the banks, and work-outs to lower payments and keep folks in their homes. So many foreclosed homes sitting empty, their lawns unkept, some being bulldozed - it's all insane. Adjust the payments and provide job training for folks so they can get back on their feet.

WTF is wrong with this country?

[Logical]

2. I am not sure I agree no home should be foreclosed. Many people tried to make a quick profit on...

houses. They had greed in their heart. Why should they be helped?

[TBF]

3. Folks who are flipping are a different scenario - I have no problem looking at each

house case by case. As for "greed in their heart" - that is what capitalism encourages so that is what you are going to get in this system. Change the system and you will undoubtedly see different behaviors. As I said, nationalize - I am for socialism.

[Logical]

5. I agree with you on nationalize the banks.

[XanaDUer]

11. One thing wrong is the average person bought the RW meme

About personal responsibility etc "bootstraps" while the powers-that-be picked our pockets and dismantled the small safety. Et that was in place.

[Donald Ian Rankin]

4. That's the wrong question.

It's the wrong question because the answer is almost certainly "no", but the answer to most of the related questions goes the other way.

"Does this family deserve to lose its home" - no.

"Should the government institute policies to ensure that this family and others like it get to keep their homes" - probably not. I'm not an economist, and I'm not willing to swear that there isn't some clever trick available, but my suspicion is that any policy designed to prevent it would do more harm than good.

[BKLawyer]

6. Not Very Sympathetic

Being a bankruptcy attorney, I can tell you that I ENCOURAGE people to dump their current homes and attempt to settle in to something less expensive. This guy has already filed for bankruptcy, so he can walk away from that home with no afterthought - any personal liability is discharged. If I were him, I might remain in the home until they actually foreclosed (it doesn't appear that the bank has), saving any mortgage payment. After foreclosure, go out, buy yourself a cheaper home, rent-to-own, land contract, whatever. Why continue to pay a mortgage payment on a home that is so clearly underwater.

During this time, he appears to have been temporarily unemployed, but seems to find a job one way or another. He left the house to move into something else, but now wants to have his old home back with the mortgage modified - even though he voluntarily abandoned the home previously. He comes back two years later, and wants to dictate terms when he hasn't paid for the home for two years. He admits to making questionable financial decisions, and wants to blame the banks when he gets himself into trouble. I'm sorry, but this is not the most sympathetic guy.

The bank did nothing to him in this case that can be seen ... the price of his home went down, and now he wants an automatic reduction in the principle amount. Doesn't always work that way. If the value went up after the loan modification and he sells, shouldn't he be required to pay that gain back to the bank up to the amount of the previous indebtedness?

And before you jump on the bandwagon of "greedy bank executives" try to remember that the banking sector employs large numbers of people besides those executives, and their livelihoods are affected by the losses the banks incur as well. I am no fan of banks (I am first and foremost a debtor's attorney) ... but it's not as easy as saying "give everyone a loan mod!"

[lunatica]

7. And you fight for the downtrodden right? Like the poor banks and such

Enjoy your stay.

[BKLawyer]

9. I sure do ...

every day in my profession. However, this guy isn't all that sympathetic to me ... I've seen people in far worse situations. He's already received a bankruptcy discharge allowing him to walk away from this home.

What this guy wants is for the bank to be forced to work with him, after receiving the discharge. Furthermore, it appears that they did offer to allow him to stay by capitalizing his arrearage ... but it's just that he doesn't like that solution. Also, he's made no effort to make any payments whatsoever.

Now, none of us complains when our house values go up ... but when the investment becomes a loser, then all of a sudden we shouldn't have to pay what we bargained for. That's kinda like saying that we can reap the profits when our stock values go up, but I need to be covered when it turns out that I lose money on my gamble. It SHOULDN'T happen for the banks ... but it's hard to justify it for the individuals as well.

That said, it would probably be stupid for the bank not to work with him to keep the home. They might be in a better position if they did. However, his bankruptcy complicates matters for the bank in that if they accept a loan mod, and the value continues to drop, and the homeowner decides to leave again ... they cannot come after him for any deficiency, and they likely won't be able to recoup their losses from insurance either. In the bank's case, they're better off foreclosing.

Now again, that would be the bank's perspective ... a perspective I understand ... but I'm not going to cry over their losses which were largely self-induced. They certainly didn't complain when home values were going up and they were refinancing, allowing homeowners to buy more home (supposedly) with inflated appraisals and lax lending standards. And they certainly obstruct any legislation which threatens

But I would also point out this ... the Democrats and Republicans had a chance to get behind legislation which would've allowed mortgage modification in bankruptcy ... and they BOTH but the kabosh to it. Instead, let's put together this phony HAMP program and allow the banks to voluntarily modify mortgages. How stupid. Yeah, they really want to do that.

There seems to be no political will to do anything truly substantive to address the problem ... sadly.

[lunatica]

13. Your sympathy for the banks is duly noted.

[BKLawyer]

15. Wow!

Ok, seeing as one of the best and most satisfying cases I recently won was a case in which I totally hosed a bank who failed to do a title search and who tried to take my client's home from him (which he had sold on land contract to his daughter, who went and got a mortgage on it, and then defaulted, and deeded property back to dad). Totally destroyed the bank on each every point they raised. Bank's lien was declared void for a number of reasons. Judge agreed with everything I said.

But you know me apparently ... shill for the banks.

[elias7]

25. Your rudeness and lack of comprehension is duly noted

[xiamiam]

16. bs..all of it..dont even know where to begin..nt

[ms.smiler]

17. BKLawyer, Welcome to DU. I suspect that you are new to your profession

and that you are unfamiliar or have little experience with securitized mortgage loans.

You stated in Post #9: “Now, none of us complains when our house values go up ... but when the investment becomes a loser, then all of a sudden we shouldn't have to pay what we bargained for.”

Because of securitization, the banks created a bubble in real estate and intentionally placed homeowners on the hook for imaginary home values. It wasn’t a question of disappointed homeowners who subsequently saw their homes decline in value.

You stated in Post #9: “Now again, that would be the bank's perspective ... a perspective I understand ... but I'm not going to cry over their losses which were largely self-induced.”

Please identify for me the losses the banks sustain. Most mortgage loans have been securitized, so the banks money was never put at risk and they don’t realize any losses. The mortgages were funded by investors in MBS.

Any penalties for noncompliance were removed from HAMP, so it actually functions only as a nice gift to mortgage servicing companies. The mortgage servicing companies do not own the loans, but are able to collect thousands of dollars on a monthly basis from the government for handling supposed loan modifications. Of course they also charge the homeowner $3,500 to $4,000 to begin the modification process when the mortgage servicer actually has no authority to modify the terms of the mortgage.

You stated in Post #6 – “Being a bankruptcy attorney, I can tell you that I ENCOURAGE people to dump their current homes and attempt to settle in to something less expensive.”

I need look no further than my neighboring state New York, to see that either 90% or 95% of homeowners are relieved of their supposed mortgage debt in bankruptcy. Due to improper/fraudulent mortgage securitization, the banks have broken the chain of Title to millions of properties. The banks/mortgage servicing companies are unable to prove a valid debt that is secured by a valid lien upon property.

It appears to me that you do your clients a great disservice by recommending that they “dump” their property. Given the fraud that is likely present in the mortgage/security instrument, then the harm that was done to the homeowner due to the many occasions where the banks & MERS broke the chain of Title, it is extremely likely that the banks/mortgage servicer owes the homeowner more money than the homeowner MIGHT owe to whoever funded the loan in the first place.

I suppose you need only list the supposed mortgage debt as unsecured debt in the bankruptcy and than watch as the banks/mortgage servicing companies have a dickens of a time proving both that they are the real owner and holder of the debt and have a valid lien upon property.

[tblue]

8. I am sympathetic but I do resent

people opposed to helping others expecting others to help them.

That being said, I don't want anyone to lose their home this way.

I have an inlaw who is a Dittohead with no health insurance who had the gov't pay his wife's huge hospital bill. He's the first one to say he hates "Big Gov't." He mooches from everybody.

[BKLawyer]

10. I'm Just Saying ...

That I don't find this guy sympathetic. He's had all his debts discharged, it appears that he has a decent job ... he wants to keep his old house, just not at the payment he wants ... when because of the bankruptcy he can walk away! He is now debt free and could go buy a similar house for far less now. Nope, he want's to tell the bank to eat it ... when he basically already did that by filing bankruptcy. How many people have that chance? And I'm sure his representative opposed any legislation allowing mortgage modification in bankruptcy.

Nobody should feel sorry for the banks.

But I'm not sure we should feel sorry for this guy either. I mean, I've seen far worse cases deserving of our sympathy ... that's all.

[ZenaD]

14. OMG I have a Fox News junkie aunt on disability

She's on Medicaid and food stamps too. I don't begrudge her any of that assistance because hers is a legitimate need but I do remind her of it every time she rails against "socializm" and welfare leeches.

[XanaDUer]

18. What does she say? nt

[ZenaD]

19. She concedes my point every time

But the next time I see her she's back at it again with the wingnut talking points.

[XanaDUer]

21. Oh well sigh. T

[taught_me_patience]

12. If you don't pay the mortgage, your home should be foreclosed

The fact that mortgages are backed by real property, allows the interest rates to be so low. If banks weren't allowed to foreclose, then a mortgage would essentially be unsecured debt and interest rates would be much higher (think credit card levels).

[NNN0LHI]

20. He deserves to benefit from any current government anti-foreclosure programs available

Same as everyone else.

Don

[Liberal_in_LA]

22. yikes. conservative republican now wants compassion shown to him.

:eyes:

[JI7]

23. my support for liberal programs has nothing to do with whether i like people since i probably don't

like many of them.

so this guy should get a break but we should not forget the type of people and things he supported before. that if it was someone else he would probably be ok with them losing their home .

and of course the republican congress member who voted against these programs needs to continually beheld accountable. will this guy vote against this guy next time ?

[XanaDUer]

24. The title is the same as the article's. Nt