harveyc

Disclosure: I had close to a 30 year career in lending, though commercial agriculture lending, not residential.

I get perturbed when I hear or read of folks bashing banks for real estate and general economy woes, etc. In my opinion, the problem is primarily due to greed by both lenders and consumers. Everybody was trying to get rich and the pyramid scheme fell apart.

This morning my wife and I closed escrow on a house in Stockton, CA, eventually intended as a second residence. The home sold for $305,000 in 2005 and was financed 100% with a first and second mortgage. The real estate market peaked around mid-2006 and in early 2007 the owners refinanced their loans and apparently took some cash out, getting a total loan of $314,500. Although they continued to hold their jobs, they decided in 2009 that it wasn't worth making payments on a mortgage much greater than the value of the home. About a year ago they moved out and took the appliances with them. It wasn't good enough that they weren't losing a dime walking away from the home, they had to commit a crime and remove appliances as well. In early 2010 we attempted to buy the home on a short sale but a mortgage insurance company (i.e., loan guarantee) would only release the owners from liability if they contributed $25,000, payable over 84 months. The owners initially indicated they would go ahead and do that but then had a change of heart. Their lender foreclosed and we just bought the home for $105,000. Probably a little above what it's worth in this condition, though it should be worth more than our investment once we make some repairs, etc.

So the lending agencies (bank, mortgage insurance company, Fannie Mae) has lost well over $200,000 and part of that is because some greedy owners ripped out the appliances.

If people bought homes as shelter rather than viewing them as "get rich" investments, I don't think we would have ever seen the ridiculous escalation in home prices nor the collapse in values.

Just my $.02!

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momoese

I hear what your saying, but don't forget those that who bought out of a strong fear that the bubble would not burst and they would never be able to afford a home. I'm sure a lot of those people took risky loans. Actually we have good friends that did and are now getting a divorce and will have to walk away from the house because they are so upside down. They did not buy out of greed, they simply ran out of room for their growing family and buying a home in Encino was cheaper than renting here on the west side. Also they can still afford the mortgage, well she can, but she wants out bad and is willing to trash her credit to do it. She's talked to several knowledgeable people and they agree this is the best thing for her to do as crazy as it sounds.

When we were home shopping in 2004 we watched the local housing market rise about 5-10k a week in our area on houses in our price range. We had already at the time decided to "wait it out" after being out bid by over 100k on a small house that we loved and was priced way above market already, and we offered 30k over asking! We were out bid so many times it was just sickening. At one point I had 1000 door knockers printed and distributed in the area we wanted to buy pleading for someone to sell us their home! lol Yes we were desperate! Luckily we changed our minds about waiting it out when we found this home on the advise of our realtor. Our home is still worth more than we paid due to our location, but most are not that lucky. Also we took a sensible 30yr fixed and refied a year ago.

harveyc

Yes, not everybody has been greedy, but greed is a big part behind the escalation of prices. I also suggest that your friend's wife's willingness to walk away from the obligation is also a form of greed.

FYI - in California if a borrower refinances their mortgage and later "walk" on the obligation, the lender can obtain a deficiency judgment against them for the shortfall between the home's value and the loan balance. If the loan is the original loan used to purchase the home, the lender is not able to seek a judgment against the borrower.

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sunfish

I should have sold 6 years ago

Scuba_Dave

Anything & everything in a house can be removed as part of a sale
Including light fixtures, floors, gardens & appliances
Usually houses are sold with these items included
But if you own the house it is not a crime to remove them

We bought a $1200+ stove for $400 from someone that still owned the house
They were selling off what they could since they owned 2 houses

Be thankful the copper was not stripped out of the house

Abnshrek

Is that way of saying you have to many plants or not enough space Tony? lol :^)

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I'm a Nannerhead :^)

sunfish

To many plants,I'd never have enough space.

No it just would of been a good time to sell.People were buying anything they could get there hands on.

momoese

Agreed, we paid way more for a small house than I think we or anyone should have due to the uber fast run-up set about by the shady lending and people either wanting to make a quick buck or just trying to get into the market while they could.


Well I didn't even begin to touch on the whole story but I assure you if you knew you wouldn't say that. She really has no choice, and it has nothing to do with greed.

BTW, congrats on the new home purchase!!

harveyc

You and I and millions of others are having to pay because of folks that walk away from their obligations. If someone simply is unable to pay, that's a different matter. Greed might not be the best description, but too many are just looking out for themself.

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harveyc

Sorry, Dave, but you are wrong. Fixtures are part of the collateral pledged for the loan and preservation of collateral is required. Destroying or wasting the lender's collateral is a crime. One of the loans held by a former employer of mine had collateral where someone removed two miles of irrigation lines. We reported it to the Sheriff who was eager to file criminal charges against our borrower but we had no way of proving the borrower committed the crime.

See some search results:
WikiAnswers - In foreclosure is it illegal to take appliances and fixtures with you that did not come with the house

Cops: Evicted man trashes house in foreclosure - Chicago Breaking News

Lots more for your reading: is it a crime to remove appliances from house in foreclosure - Google Search

You may have unknowingly committed a crime yourself in buying the stove.

I don't have to be thankful the copper wasn't stripped from the house. The prior owner should be thankful as he'd have that much larger of a deficiency judgment against him. The house would sell at a much steeper discount if it had wiring removed and/or been vandalized. I've seen plenty of those types of homes but not as many as I had thought when I first started looking into buying another home.

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Jack Daw

No, Tony just has a stupid neighbour, who thinks that Tony keeps taking pictures of her and her family to later... I don't really know what you cna do with that.

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Thnx to Marcel, Ante, Dr. Chiranjit Parmar and Francesco for the plants I've received.



Zeitgeist - Corporatocracy 101 (~2hrs)

Zeitgeist - Moving Forward (~2.5hrs)

momoese

Everyone looks out for themselves, you and I included. No one is going to take a beating for the better or everyone else.

harveyc

I do things all the time that I'd rather not do. If I promise to do something, I do my best to do what I said I'd do. I always try to do what I think is right, not what benefits me the most.

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Scuba_Dave

Actually when you sell a house you can stipulate what is & is not sold with the house
Plug in apliances are not required to be sold with a house unless stated in the sales agreement

You also have to prove who took the appliances, copper etc

harveyc

Dave, read my first post again.

Fannie Mae did not remove the appliances. The prior homeowner removed them before the home was foreclosed on. The refrigerator is no big deal but removing built-in appliances like range/oven, dishwasher, and hood fan are all fixtures that are part of the real estate collateral.

You didn't specify if the stove you bought came from a house being foreclosed on by the bank or not. Removing fixtures from the collateral requires the lender's approval, though they obviously don't care as long as they get paid off.

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Scuba_Dave

You are not required to have any of those items installed in a house
Or required to leave them in a house when you sell it
You can take anything that plugs in

My stove is plug-in
But you are not required to have a stove in a house, hard wired or not
Dishwasher can be plugged in or hard wired
But one is not required in a house
Same with a microwave
My washer & dryer came with me when we moved
As did the microwwave (over stove), stove & fridge since they all matched
Not against the law to remove them

Unless they were specifcially listed on the loan ....not included
I could cook my meals on an outdoor grille if I wanted
Laundramat is around the corner
We don't have a dishwasher, If I put one in I can remove it
Appliances are replaceable items

momoese

Sometimes the right thing to do is what benefits you and your family by removing yourself from a dangerous situation. Catch my drift?

harveyc

Dave, you are wrong. Did you read any of the links above? What do you base your statements on? Things don't need to be specifically listed on your loan to be collateral. If they are "affixed", they are a fixture and are collateral. Spare me the arguments, I worked in this business for close to 30 years.

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harveyc

Okay, Mitchel, I've got it. I was basing my comments on your statement that your friend could still afford the payments. Many people "walk" simply to transfer their loss in value to the lending institutions.

A good friend of mine bought his house near the peak and I warned him against it. He was so eager to buy a house that he bought one that requires a two hour commute to work. His father-in-law sells real estate and told him he couldn't lose and I told him his father-in-law apparently hadn't been in real estate long enough to see how people had been wiped out before. I sure didn't predict it would get as bad as it has, though. In any event, my friend has been tempted to walk away since his home is now worth about 60% of what's owed on it but he realizes he made a commitment and still is fortunate to have a good job and can afford his payments and continues to do so. I believe society would be better and, possibly, real estate prices might not have declined as much if more folks were responsible like my friend.

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Scuba_Dave

I worked for a bank for 5 years
They aren't required
If they aren't specifically listed on the loan agreement they are not collateral
Not even required to be installed in the house
And I doubt removing them caused anywhere near $200k of loss
The Real Estate market caused the loss in value

WikiAnswers ?? Gimme a break