The signs are coming out!

[Barklessdog]

A house near us that could not sell, went into foreclosure about 6 months ago. This week the bank plastered big yellow stickers all over the house FORECLOSURE!!

I never have seen that.

Our old investor used to tell us, "A depression coming, it can happen again " (being a child of the depression). "Wait till you have to live through a depression" he would tell us then start about people/families coming to his house begging for food.

[Dave W]

Hope you don't have any Fannie Mae or Freddie Mac stock.

[Barklessdog]

it looks like a cheap fire basement sale or a used car lot, but on a house!

No Fanny Mae, unless you mean the candy?

[gweimer]

You know, I wish that there had been the public outcry and federal concern when I lost my townhouse 2 years ago.  The funny thing is that my FIL told us to just walk away.  It wasn't worth saving.  In the end, he was right.  It was sold at the sheriff's sale for the same price we paid.  We cleared the debt, survived, and moved on.  Life is better now.  In the end, it was just a building.  The lesson is - dump it while you can, or just leave it behind.  Don't kill yourself trying to save something that could destroy everything around you.

[Dave W]

it looks like a cheap fire basement sale or a used car lot, but on a house!

No Fanny Mae, unless you mean the candy?

I meant the government-sponsored (but publicly traded) loan guarantee corporations, both of them are in serious trouble.

[Nocturnal]

We have one a couple of houses away that they put signs on a couple of weeks ago. The signs aren't very big (the size of a for sale sign that you would put on your car) but it is yellow and everyone knows what it means. I looked at a lot of bank owned houses during our home search. Some had been trashed by the people on the way out.

I guess there has been a lot of people doing the "jingle mail" routine here in the Valley. They just walk away from the house and send the bank the keys. There was a big article about it in the paper recently. Other than ruining your credit (which it probably already is at that point) there don't seem to be any real financial penalties to it. From what the article said, the bank doesn't come after you for the money that they loose in the sales. I'm not an expert on this so don't take my word for it. I know that the article said that they are trying to get laws passed to go after people that do walk away to get some of the money back. These people are also killing the home values in their neighborhoods for everyone that still owns homes there.

I'm not a finance guy so I don't know how these things work, but it seems like in this type of real estate situation that lenders would be better off re-negotiating the loan & terms with the homeowner to let them keep the home and keep the bank from having to spend all the extra money in the forclosure/reselling process. I'm sure it's not as simple as it sounds but it just seems like a better solution than the huge amount of forclosures we are seeing.

[Darrol]

Indeed Nokturnal, more than once my mom has talked about her dislike for people that do that.

[Dave W]

I guess there has been a lot of people doing the "jingle mail" routine here in the Valley. They just walk away from the house and send the bank the keys. There was a big article about it in the paper recently. Other than ruining your credit (which it probably already is at that point) there don't seem to be any real financial penalties to it. From what the article said, the bank doesn't come after you for the money that they loose in the sales. I'm not an expert on this so don't take my word for it. I know that the article said that they are trying to get laws passed to go after people that do walk away to get some of the money back. These people are also killing the home values in their neighborhoods for everyone that still owns homes there.

What often happens is that at the foreclosure sale, the lender buys it back at the remaining loan balance, which keeps the lender from having to show the loss on their books. They eventually have to unload it, sometimes at a huge loss. But since they chose to buy it at auction, it's their loss, not the walk-away owner's loss, so they can't come back and collect. Even if the laws were changed, they wouldn't collect much. In most cases it would be like squeezing blood out of a turnip.

Sure, the walk-aways are damaging values, but sometimes the people have no choice. If you lose your job and you can't sell your house for what you owe, and you can't afford to keep paying for it, what else can you do?

I'm not a finance guy so I don't know how these things work, but it seems like in this type of real estate situation that lenders would be better off re-negotiating the loan & terms with the homeowner to let them keep the home and keep the bank from having to spend all the extra money in the forclosure/reselling process. I'm sure it's not as simple as it sounds but it just seems like a better solution than the huge amount of forclosures we are seeing.

In some places and with some lenders, this is happening. But other lenders won't do it. Some of them would wind up collapsing if they had to revalue their loan portfolios at what the market is now.