Comments on: To Foreclose or Not to Foreclose… http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/ Seattle's Leading Resource for Real Estate Information Fri, 19 Mar 2010 05:20:19 -0700 http://wordpress.org/?v=2.8.4 hourly 1 By: Brian Brady http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156515 Brian Brady Thu, 05 Jul 2007 05:39:00 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156515 "oftentimes, families would have to sell their children to repay their debts." Now, THAT is collateral. “oftentimes, families would have to sell their children to repay their debts.”

Now, THAT is collateral.

]]> By: David Young, LO http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156332 David Young, LO Wed, 04 Jul 2007 17:37:34 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156332 Yes, it is true. The guy who told me was 2nd generation Russian immigrant. He said that many loans (we'd call them hard money) that go into default are basically collateralized by people. Anyone here ever heard of John Bunyan? He's an author from the 17th century (i think 17th) that wrote the book 'Pilgrim's Progress' while in debtor's prison. Debtor's prison was a place you go if you can't repay your debts...oftentimes, families would have to sell their children to repay their debts. http://en.wikipedia.org/wiki/Debtor's_prison Amazing, huh?!? While I bet those people had lower default ratios, I'd rather leave that practice behind. Yes, it is true.

The guy who told me was 2nd generation Russian immigrant. He said that many loans (we’d call them hard money) that go into default are basically collateralized by people.

Anyone here ever heard of John Bunyan? He’s an author from the 17th century (i think 17th) that wrote the book ‘Pilgrim’s Progress’ while in debtor’s prison. Debtor’s prison was a place you go if you can’t repay your debts…oftentimes, families would have to sell their children to repay their debts.

http://en.wikipedia.org/wiki/Debtor’s_prison

Amazing, huh?!? While I bet those people had lower default ratios, I’d rather leave that practice behind.

]]> By: ARDELL http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156311 ARDELL Wed, 04 Jul 2007 16:10:05 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156311 Thanks David, A very good message for today, Indpendence Day. Given my background even here in this Country, yes, consequences for lack of payment are very tame indeed. Thanks David,

A very good message for today, Indpendence Day. Given my background even here in this Country, yes, consequences for lack of payment are very tame indeed.

]]> By: Jillayne Schlicke http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156178 Jillayne Schlicke Wed, 04 Jul 2007 06:50:23 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156178 OMG, David. Is that true? I have no reason to doubt you and it's not April Fools Day. This would make an interesting blog article: "forelosure practices around the world." Yikes! Talk about hard money lending. I have an interest in micro-lending and plan to enter this arena someday. I'm sure I'll learn all about lending practices in different parts of the world. Let me know if you run across any books I should read! OMG, David. Is that true? I have no reason to doubt you and it’s not April Fools Day. This would make an interesting blog article: “forelosure practices around the world.” Yikes! Talk about hard money lending.

I have an interest in micro-lending and plan to enter this arena someday. I’m sure I’ll learn all about lending practices in different parts of the world. Let me know if you run across any books I should read!

]]> By: David Young, LO http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156134 David Young, LO Wed, 04 Jul 2007 02:42:05 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156134 I heard something very interesting from one of the many Seattle-area immigrants recently. He said that basically, where he comes from, if you default on a loan, they take your family and (in some cases) kill them. He then went on to say that the reason he and several like him risk so much in leveraging themselves out (i.e. mortgage debt) is simply that the worst-case consequences are so tame compared to those of his original country. This statement isn't really made to produce a point, just rather to make you think. I thought it very interesting. I heard something very interesting from one of the many Seattle-area immigrants recently. He said that basically, where he comes from, if you default on a loan, they take your family and (in some cases) kill them. He then went on to say that the reason he and several like him risk so much in leveraging themselves out (i.e. mortgage debt) is simply that the worst-case consequences are so tame compared to those of his original country.

This statement isn’t really made to produce a point, just rather to make you think. I thought it very interesting.

]]> By: craig http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156046 craig Tue, 03 Jul 2007 19:35:01 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156046 Wow -- what a thread. Unfortunately, my work load today is a little heavy and I do not have time to participate in this great conversation. My only comment: I agree wholeheartedly with Ardell that the seller should seek legal counsel before signing an agreement requiring a short sale of the home. The consequences of a short sale vary from state to state, but at the very least the homeowner may in fact have equity in the property that is being "taken" by the buyer at a short sale. Admittedly, the seller is short of money -- otherwise there would be no dilemma. Nonetheless, there may be equity and the seller may have additional liability associated with the short sale. The seller should spend some time locating an attorney who can review and explain the transaction for a reasonable fee, something in the order of a few hundred dollars. Also, Ardell is correct that an agent should NOT be explaining a short sale to the client. This is clearly the practice of law and beyond the agent's legal authority, not to mention beyond (in many if not most instances) the agent's knowledge and skill level. I can appreciate the desire to provide "full service," but as Ardell points out (and as required by statute) full service requires the agent to refer the client to a more knowledgable professional, not to answer all questions him/herself. Wow — what a thread. Unfortunately, my work load today is a little heavy and I do not have time to participate in this great conversation. My only comment: I agree wholeheartedly with Ardell that the seller should seek legal counsel before signing an agreement requiring a short sale of the home. The consequences of a short sale vary from state to state, but at the very least the homeowner may in fact have equity in the property that is being “taken” by the buyer at a short sale. Admittedly, the seller is short of money — otherwise there would be no dilemma. Nonetheless, there may be equity and the seller may have additional liability associated with the short sale. The seller should spend some time locating an attorney who can review and explain the transaction for a reasonable fee, something in the order of a few hundred dollars.

Also, Ardell is correct that an agent should NOT be explaining a short sale to the client. This is clearly the practice of law and beyond the agent’s legal authority, not to mention beyond (in many if not most instances) the agent’s knowledge and skill level. I can appreciate the desire to provide “full service,” but as Ardell points out (and as required by statute) full service requires the agent to refer the client to a more knowledgable professional, not to answer all questions him/herself.

]]> By: ARDELL http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156017 ARDELL Tue, 03 Jul 2007 18:03:07 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156017 Bottom line, clearly a consumer should seek legal counsel before agreeing to go the short sale route. Once the seller signs the Purchase and Sale agreement, it may be too late to reverse the decision and might force them to take the consequences of a short sale. So the consumer needs to see an attorney before they put the house on the market. Listing Agents should not be listing the property and explaining "short sale" as if it is a foregone conclusion. Listing agents should rather be counseling sellers to seek legal advices before putting their homes on market. No seller should list their home before discussing with an attorney the difference between letting the other shoe drop and going the short sale route. Further, no agent should list a home unless they are convinced that the seller is aware of the full ramifications of their actions, and listing with fully informed consent regarding the alternative consequences. I'd like to hear from Craig on this one regarding a reasonable cost for such a service to owners, before they sign listing agreements. Seems to me it wouldn't be cost prohibitive for an owner to seek legal advices prior to putting their home on market. Bottom line, clearly a consumer should seek legal counsel before agreeing to go the short sale route. Once the seller signs the Purchase and Sale agreement, it may be too late to reverse the decision and might force them to take the consequences of a short sale. So the consumer needs to see an attorney before they put the house on the market.

Listing Agents should not be listing the property and explaining “short sale” as if it is a foregone conclusion. Listing agents should rather be counseling sellers to seek legal advices before putting their homes on market.

No seller should list their home before discussing with an attorney the difference between letting the other shoe drop and going the short sale route. Further, no agent should list a home unless they are convinced that the seller is aware of the full ramifications of their actions, and listing with fully informed consent regarding the alternative consequences.

I’d like to hear from Craig on this one regarding a reasonable cost for such a service to owners, before they sign listing agreements. Seems to me it wouldn’t be cost prohibitive for an owner to seek legal advices prior to putting their home on market.

]]> By: ARDELL http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156015 ARDELL Tue, 03 Jul 2007 17:55:04 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156015 Jillayne, This discussion is having me reach for books on the differences between loans secured by mortgages vs deeds of trust. It was my understanding that while lenders had to face a longer process in order to foreclose without a deed of trust, the advantage to the lender was that they could capture any shortfall. I further thought that the tradeoff from the lender's perspective for loans secured by deed of trust making the foreclosure process faster, cheaper and easier, was they were then limited to whatever they got at the foreclosure. That would mean that if a consumer doesn't want to be responsible for the difference, they should object to the short sale and let it go through the entire process. Are owners forfeiting their rights under Deed of Trust loans by getting into the preforeclosure short sale game? Should they let the process conclude in normal fashion, which would absolve them of being required to compensate the lender for the shortfall? One might say the consumer is falling short of meeting their obligation to repay the loan in full. But wasn't that the tradeoff the lender agreed to when the purchaser agreed to a swift deed of trust remedy in the event of default? Seems like in a short sale, if the buyer agrees to particpate in the shortfall, they are getting all of the disadantages and none of the benefits of the Deed of Trust method. Jillayne,

This discussion is having me reach for books on the differences between loans secured by mortgages vs deeds of trust.

It was my understanding that while lenders had to face a longer process in order to foreclose without a deed of trust, the advantage to the lender was that they could capture any shortfall. I further thought that the tradeoff from the lender’s perspective for loans secured by deed of trust making the foreclosure process faster, cheaper and easier, was they were then limited to whatever they got at the foreclosure.

That would mean that if a consumer doesn’t want to be responsible for the difference, they should object to the short sale and let it go through the entire process. Are owners forfeiting their rights under Deed of Trust loans by getting into the preforeclosure short sale game? Should they let the process conclude in normal fashion, which would absolve them of being required to compensate the lender for the shortfall?

One might say the consumer is falling short of meeting their obligation to repay the loan in full. But wasn’t that the tradeoff the lender agreed to when the purchaser agreed to a swift deed of trust remedy in the event of default? Seems like in a short sale, if the buyer agrees to particpate in the shortfall, they are getting all of the disadantages and none of the benefits of the Deed of Trust method.

]]> By: david losh http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156008 david losh Tue, 03 Jul 2007 17:28:42 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-156008 Goodness! I'm sorry Dustin that my comments don't make any sense to you. In my opinion this person needed more counseling before making a purchase. I'm well aware that this person had a Real Estate agent, and lender they found some place. Was the client served? Were they served well? My assumption is they paid full retail for professional advice, then moved ahead based on that advice. An attorney could have helped them at that point by making an opnion and explaining the risks of a home purchase. Will a reduced commission or rebate generate better advice? Will some one who is paid a fee to fill out paper work counsel the client tailored to a specific set of circumsatances? Bad markets happen in Real Estate. These same questions about foreclosure come up through the cycles on a regular basis. Those consumers who walk away from a financial obligation are targeted for years. These "investors" are usually large corporation with diverse credit portfolios. When you counsel people who have been through a short sale or foreclosure as a Real Estate agent how do treat that person? Do they go to the bottom of your client list? Of course they do! Any lender for anything is going to look at these people the same way. There is no insight involved. You have to do what you have to do to hold on. Real Estate pricing is a function of time. The cycle will come back around. Goodness!
I’m sorry Dustin that my comments don’t make any sense to you. In my opinion this person needed more counseling before making a purchase. I’m well aware that this person had a Real Estate agent, and lender they found some place. Was the client served? Were they served well?
My assumption is they paid full retail for professional advice, then moved ahead based on that advice. An attorney could have helped them at that point by making an opnion and explaining the risks of a home purchase.
Will a reduced commission or rebate generate better advice? Will some one who is paid a fee to fill out paper work counsel the client tailored to a specific set of circumsatances?
Bad markets happen in Real Estate. These same questions about foreclosure come up through the cycles on a regular basis. Those consumers who walk away from a financial obligation are targeted for years. These “investors” are usually large corporation with diverse credit portfolios.
When you counsel people who have been through a short sale or foreclosure as a Real Estate agent how do treat that person? Do they go to the bottom of your client list? Of course they do! Any lender for anything is going to look at these people the same way. There is no insight involved.
You have to do what you have to do to hold on. Real Estate pricing is a function of time. The cycle will come back around.

]]> By: Jillayne Schlicke http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-155757 Jillayne Schlicke Tue, 03 Jul 2007 01:47:56 +0000 http://raincityguide.com/2007/06/30/to-foreclose-or-not-to-foreclose/#comment-155757 Hi Andy, How are the short sale negotiations going in East Bay? Are you finding lenders willing to "forgive" the short fall or are they asking homeowners to pay back the difference? Hi Andy,

How are the short sale negotiations going in East Bay? Are you finding lenders willing to “forgive” the short fall or are they asking homeowners to pay back the difference?

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