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Jschoon007
40 Posts |
 Posted - 07/17/2008 : 12:55:03 PM
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http://www.puredoxyk.com/index.php/2008/07/16/black-monday-2008-foreclosure-apocalypse/
Okay. “Black Monday” already happened, in the 80’s and then also back in the 20’s according to some slang-artists, but one of the attorneys I work with gave this last Monday (June 14 2008) the name, and it seems to have stuck. You could also call it “Screw Everybody We’re Foreclosing On You All” Monday, if you’re so inclined.
Here’s what happened, and pardon me if I sound a little frantic, but I feel a bit like Cassandra here; I’m freaking out about this but by and large, most people don’t seem to realize it happened. Most people only know one or two people involved in mortgage negotiations, so they didn’t see the coordinated collapse that I saw.
In a nutshell, what happened is that Monday morning, all the major mortgage banks in the U.S. issued some kind of order or decree, that they would cease conducting any kind of workouts or negotiations with borrowers, and instead foreclose on every home they could.
I know this because the nonprofit I work for is a sort of hub that helps people understand their options and take steps to avoid foreclosure. That means that I’m in regular communication with, among other people, brokers and lawyers who are trying to help people who have problems with their mortgages and need to negotiate with their mortgage companies; as well as individuals who are trying to work things out themselves.
Mortgage negotiations are absolutely critical…
Because mortgage problems are very, very often related to bad loans whose payments are increasing, or to properties whose values are now way under the value of the mortgage, or that have other problems like job losses or illness to deal with, helping people with mortgages often means contacting the lender and getting them to make a change to your mortgage so someone doesn’t lose their home. They may change it from an adjustable to a fixed loan; lower your interest rate; forgive a late payment or two; or something like that. These “mortgage workouts” are not only common, but they are the accepted way for borrowers to handle problems with their mortgage. Governments and banks alike have been urging borrowers to contact their lenders and “work something out” as the main way of fighting foreclosures for some time now. That’s basically what the whole “HOPE” thing the federal government “did” (if you want to call it doing anything) was. Unfortunately, the government neglected to give this solution any teeth by requiring banks to work with people, so thus far it’s been a game of incredibly one-sided negotiations, often requiring people who are already broke to get legal help (a good lawyer can negotiate better than you can) if they want to keep their houses.
As if that wasn’t bad enough, on Monday, the banks stopped making any deals.
Let me say that more clearly: As of 9 a.m. on Monday, ALL the major banks stopped making ANY deals whatsoever that I’m aware of. They even called off workouts that were in progress, including ones that were all done except for signing the papers. This is whether or not the borrower was actually in foreclosure yet.
…And now they’re gone?
A comment related to me from someone who asked the biggest foreclosure law firm in our area about it was, “We’ve been given our marching orders: No more deals. No more workouts. We play by the rules, and if we can foreclose, we foreclose.” Apparently these “marching orders” came down from every major bank (at least) in the U.S. first thing Monday morning, and as of today, there still seems to be no movement away from this new “policy” of letting homes go into foreclosure en masse, with no way out whatsoever for troubled homeowners.
One of the attorneys I work with was busy negotiating about ten cases
for us, and his panicked phone call on Monday afternoon was what tipped
me off. Then my company started hearing from people who were involved
in their own negotiations, every one of them with a story about how the
bank called them on Monday and called off the whole thing. At this
moment, I’m not aware of a single negotiation that’s still going on,
with the exception of two that an attorney I know managed to keep alive
by convincing someone he knew on the other side to risk their job by
breaking the new rules.
That means….
Lost your job and missed a few payments? Pay them in full, right now, or lose your home.
Grandma got shafted into an unfair mortgage she should never have been given? Pay it on its terms (unless you can refinance by some miracle), or Grandma’s homeless.
Interest rate about to increase, making your payments jump several hundred bucks a month, even though your home isn’t even worth the amount of your loan anymore? Tough titties.
…And much, much more. I talk to and meet with these people every day, and up until this week, it’s been a source of great pride to be able to help at least some of them out, because almost none of them deserve to lose their homes.
Well. As of “Black Monday”, people who call me can either A) have the credit score and means to refinance (which means they can’t have missed any payments, and their mortgage can’t be more than about 80% of the new, lower value of their homes, and they have cash on hand for closing costs); or B) pack their bags.
But WHY???
What’s really scary, besides the fact that nobody seems to know this is happening, unless they do a job like mine; is that if they do know about it, they don’t know why.
Since Monday, I’ve written to several blogs and called everybody I can think of short of my state representatives (who are next, if I can’t get some answers soon) to try and figure out what the hell banks are thinking. Nobody can tell me — in fact, everybody so far has been shocked to hear what I’m telling them about Black Monday. Everyone who checks up on it agrees that it’s happening — major foreclosure law-firms have their orders to cease negotiations immediately; and citizens not in foreclosure who were attempting to work a deal out themselves all got shut out completely. No explanations — even the super-huge law firms don’t seem to know why they were given these orders, or towards what purpose.
Thinking more generally for a moment, it’s hard to see what banks can possibly gain from this behavior: They lose usually at least $20,000 on every foreclosure, which is way over the cost of working out most loans with the borrowers. I don’t know about you, but I’m used to banks at least making sense — they may be evil sometimes, but you know how they tick; they’re doing what they’re doing because of the bottom line. But no-one I’ve spoken to can tell me how forcing millions of homes to go into foreclosure helps the bottom line for anybody.
One super scary thing that someone mentioned to me as a possibly explanation is that maybe the banks have gotten together and agreed to try a “suicide gambit” — basically threatening to eradicate themselves (which is what unchecked foreclosures would do at this point) if the government doesn’t bail them out (as it plans to for Fannie Mae and Freddie Mac). This would be the most terrifying thing I could imagine — especially for homeowners — because as we’ve learned by messing with suicide bombers, there ain’t much you can do to fight someone who’s willing to die for their cause. So, although I can’t find the slightest shred of evidence that anything other than that is going on, I’m going to keep hoping as hard as I can that that isn’t it. If it’s anything else, some weird legal or tax thing maybe, then there’s a possibility that organizations like mine can figure out a way to negotiate with the banks that takes their “concerns” into consideration.
Hopefully I’ll have more information later in the week — I’m still trying to get permission from some of our executives to make the really heavy-dirty phone calls. But this is definitely real, and if it continues, (seriously, let’s hope like hell that it’s temporary), it could be the worst thing to happen to the U.S. — and even the world — economy yet.
…
…
By the way…please forgive my rather hideous grammar and typesetting skillz, and my tendency to babble lately. This week…all these people calling and me knowing in the pit of my stomach that I probably can’t help them now and can’t even tell them why…it’s been incredibly tough. Sorry.
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JoefromPhilly
558 Posts |
Posted - 07/17/2008 : 1:00:42 PM
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That's a hell of a post! Keep us posted as to what you find out. There was just an article today on money.cnn.com about the various work-out methods on saving homes. In declining markets such as Miami and Vegas, banks don't want the homes as they won't be able to sell them for squat. In other parts of the country, where the values have not dropped, they are less likely to do a work-out as they know they can get value for the home if they foreclose.
- Joe |
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rtrefflich
2655 Posts |
Posted - 07/17/2008 : 1:02:23 PM
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Sorry, this makes no sense to me at all. Are you saying that on Monday July 14th all banks will stop working with borrowers? If that is the claim I would have to disagree simply because I am working with about 10 different banks as we speak. None of them have indicated that they are going to stop working with us and they are giving us approvals, BPO's and everything.
If you are claiming that on the 21st they will stop working with us, I can't say anything about that because we are not there yet. Why would they do this, what purpose would it serve and who would it benefit. It would have no purpose, would serve no one and in this case no one benefits.
With the new law passed in CA regarding foreclosures working with struggling borrowers would be more advantageous than allowing them to go into foreclosure, giving them their rights and 60 days instead of 30 to leave their homes. This would cost them more money and time to get rid of the houses. |
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monarchdad
1806 Posts |
Posted - 07/17/2008 : 1:10:13 PM
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While I really don't have time to really read all of that ****, I can call BS after the first couple of paragraphs.
- banks do short pays and mods for their benefit, not so much for the benefit of the borrowers. Bankers are business people, not charity donors. They do workouts when and because it makes good business sense for them. You think they want to foreclose on some property in say Bakersfield that has a lien of 400K and maybe a value of 250 on a good day?
- You really think all these loan servicers who work independently all got together at some Holiday Inn meeting room and sat down and decided, no more modifications! Comon on, give me a break. |
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Jschoon007
40 Posts |
Posted - 07/17/2008 : 1:27:36 PM
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| I've seen this blog on a couple other sites... I can't get a straight answer from though. I hope it's B.S. It doesn't make sense. Unless they are getting ready for Armageddon. Which if they were, I would hope we would know something about it. |
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rtrefflich
2655 Posts |
Posted - 07/17/2008 : 1:34:44 PM
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If that were the case we wouldn't have to worry about having our home or not, as everything will be destroyed and we are all dead anyway.
quote:
Originally posted by Jschoon007
I've seen this blog on a couple other sites... I can't get a straight answer from though. I hope it's B.S. It doesn't make sense. Unless they are getting ready for Armageddon. Which if they were, I would hope we would know something about it.
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StephanieGibbons
50 Posts |
Posted - 07/17/2008 : 1:37:36 PM
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| Each state has different laws that regulate how foreclosures can happen and the notice that has to be put into foreclosing. This cannot be a blanket decision. |
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teamlend
347 Posts |
Posted - 07/17/2008 : 1:40:01 PM
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Every bank agreed to do this? The attoney's know? This is the first time this info is getting to us since this happened on monday?
C'mon. All the banks could get together and take a year just to decide where they were going for lunch!
I believe this post is B/S |
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darkstar
16976 Posts |
Posted - 07/17/2008 : 1:46:42 PM
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| No way they will shoot themselves in the foot after putting so many resources into making sure they can handle more and more of them...It's a wave they have to get thru, no way to stop it...JMHO... |
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teamlend
347 Posts |
Posted - 07/17/2008 : 1:56:23 PM
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I just pulled this off of the "onion"-me :
Note that you’ve given the date as Monday, June 14 when in fact it appears you meant Monday, July 14.
puredoxyk :
Wup, you’re right — thanks! It’s been kind of a blurry month. ;)
The original poster- puredoxyk
Than I tried to repond and received this-
Internal Server Error
The server encountered an internal error or misconfiguration and was unable to complete your request.
Please contact the server administrator, puredoxyk@gmail.com and inform them of the time the error occurred, and anything you might have done that may have caused the error.
More information about this error may be available in the server error log.
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Server at www.puredoxyk.com Port 80
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mandysmom
268 Posts |
Posted - 07/17/2008 : 2:21:56 PM
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| Does the poster mean July 14th???? What a crock of sh ite. |
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Agent_Mike
351 Posts |
Posted - 07/17/2008 : 2:53:30 PM
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I believe you mean "Black Thursday" during the Great Depression ... unless you're referring to some future Monday that's coming.
Economically speaking, that is a asinine idea to fathom. That somehow the banks will indefinitely ignore all work-out and servicing requests in order to foreclose a property. There are so many reasons why this doesn't make money sense - especially when the banks are short on money.
In a market where equity is on the rise, it may make sense for banks to enact such policy - where they can foreclose on a house and gain from the rising equity. But in a declining market, this seems like financial suicide.
Also - loan re-workouts and modifications aren't necessarily banks lending more money - they're simply changing the terms of the contract on money they already service in order to keep making money - as opposed to clients being unable to pay.
A foreclosure costs a bank much more than re-structuring a loan so a willing and able client can keep their homes.
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