Comments on: “Hope Now” program to curb delinquency/foreclosures fraught with problems http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/ 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: Shane http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-231218 Shane Fri, 21 Dec 2007 14:24:36 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-231218 Rhonda that is exactly my point. Kary comments that in his 20 years of experience people people will defend their home before all else. They had equity back then, now they don't, with all the exotic financing, so they are much more likely to walk away. Which is what that quote is confirming. This bubble led to a lot of odd behavior on the way up, don't be surprised when it leads to odd behavior on the way down. Rhonda that is exactly my point. Kary comments that in his 20 years of experience people people will defend their home before all else. They had equity back then, now they don’t, with all the exotic financing, so they are much more likely to walk away. Which is what that quote is confirming.

This bubble led to a lot of odd behavior on the way up, don’t be surprised when it leads to odd behavior on the way down.

]]> By: Rhonda Porter http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-230891 Rhonda Porter Thu, 20 Dec 2007 23:54:02 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-230891 If someone owes more than what their home is currently valued from doing 100% ltv...I'm sure it's easier to walk away than if one had equity in the home. Apples and oranges. Someone with no equity who is walking away is going to need their credit cards to live off of. It's sad. If someone owes more than what their home is currently valued from doing 100% ltv…I’m sure it’s easier to walk away than if one had equity in the home. Apples and oranges.

Someone with no equity who is walking away is going to need their credit cards to live off of. It’s sad.

]]> By: Shane http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-230843 Shane Thu, 20 Dec 2007 22:03:44 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-230843 http://online.wsj.com/article/SB119802116320237959.html "We're seeing people who are current on their credit cards but are defaulting on their mortgages," Mr. Lewis says. "I'm astonished that people would walk away from their homes." http://online.wsj.com/article/SB119802116320237959.html

“We’re seeing people who are current on their credit cards but are defaulting on their mortgages,” Mr. Lewis says. “I’m astonished that people would walk away from their homes.”

]]> By: Kary L. Krismer http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-223193 Kary L. Krismer Fri, 07 Dec 2007 04:35:11 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-223193 Shane, I'd disagree with that. In my 20 or so years of practicing bankruptcy law I found many (if not most) people in financial trouble think of it as their home, and have home ownership as a major goal--something they don't want to give up. That's what I was referring to when I said they make amazing sacrifices. It's perhaps not entirely rational, but they don't really think equity when they think of a home (or even a car). They think they own it, and they don't want to give it up. Shane,

I’d disagree with that. In my 20 or so years of practicing bankruptcy law I found many (if not most) people in financial trouble think of it as their home, and have home ownership as a major goal–something they don’t want to give up. That’s what I was referring to when I said they make amazing sacrifices.

It’s perhaps not entirely rational, but they don’t really think equity when they think of a home (or even a car). They think they own it, and they don’t want to give it up.

]]> By: Shane http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-223050 Shane Thu, 06 Dec 2007 22:22:15 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-223050 Kary, I think the difference is that newer homeowners don't have a skin in the game, so to speak. People who had 100% financing, or close to it, think its better to just walk away, especially after the value of the house went down. They owe more than the house is worth so they feel its in their best interest to just walk away from it. Whereas credit cards are needed to sustain their standard of living, at least for a little while. Everything is upside down. At least thats how I see it, who knows what is actually going through their heads. Kary,

I think the difference is that newer homeowners don’t have a skin in the game, so to speak. People who had 100% financing, or close to it, think its better to just walk away, especially after the value of the house went down. They owe more than the house is worth so they feel its in their best interest to just walk away from it. Whereas credit cards are needed to sustain their standard of living, at least for a little while. Everything is upside down.

At least thats how I see it, who knows what is actually going through their heads.

]]> By: Kary L. Krismer http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222993 Kary L. Krismer Thu, 06 Dec 2007 19:08:20 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222993 Rhonda, I'd agree with that fully. I've seen people not open their mail for months. Very frequently they try to contact a bankruptcy attorney only the day before the foreclosure (which was bad before the new bankruptcy code, but possibly the kiss of death now). BTW, some of these people are intelligent and even successful people, who for one reason or another get into trouble. Stress really does affect people greatly! Rhonda, I’d agree with that fully. I’ve seen people not open their mail for months. Very frequently they try to contact a bankruptcy attorney only the day before the foreclosure (which was bad before the new bankruptcy code, but possibly the kiss of death now).

BTW, some of these people are intelligent and even successful people, who for one reason or another get into trouble. Stress really does affect people greatly!

]]> By: Rhonda Porter http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222987 Rhonda Porter Thu, 06 Dec 2007 18:49:13 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222987 Kary, most consumers are not contacting their mortgage company to try to avoid foreclosure when there's a possiblity of them avoiding foreclosure (or at least buying time) by dealing with the loss mitagation departments. Consumers under this much stress are not thinking clearly. Kary, most consumers are not contacting their mortgage company to try to avoid foreclosure when there’s a possiblity of them avoiding foreclosure (or at least buying time) by dealing with the loss mitagation departments. Consumers under this much stress are not thinking clearly.

]]> By: Kary L. Krismer http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222909 Kary L. Krismer Thu, 06 Dec 2007 16:32:11 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222909 Rhonda wrote: "Kary, I’ve heard stats on CNBC that many of the troubled home owners are paying credit cards before their mortgage because they’re wanting to have funds to rent and live after they lose their house." Well, I don't doubt that you heard that on CNBC (listen to it long enough and you'll hear everything). But it doesn't make much sense. In Washington to be foreclosed out you'll have not made mortgage payments for at least 6 months. If you need to rely on credit cards to rent at that point in time, your situation is beyond the average level of most people. But I will say people do all sorts of strange things, especially before they consult an attorney. I once saw a case where the person had $40,000 in the bank and $70,000 of credit card debt. Rhonda wrote: “Kary, I’ve heard stats on CNBC that many of the troubled home owners are paying credit cards before their mortgage because they’re wanting to have funds to rent and live after they lose their house.”

Well, I don’t doubt that you heard that on CNBC (listen to it long enough and you’ll hear everything). But it doesn’t make much sense. In Washington to be foreclosed out you’ll have not made mortgage payments for at least 6 months. If you need to rely on credit cards to rent at that point in time, your situation is beyond the average level of most people.

But I will say people do all sorts of strange things, especially before they consult an attorney. I once saw a case where the person had $40,000 in the bank and $70,000 of credit card debt.

]]> By: Rhonda Porter http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222891 Rhonda Porter Thu, 06 Dec 2007 15:58:28 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222891 Kary, I've heard stats on CNBC that many of the troubled home owners are paying credit cards before their mortgage because they're wanting to have funds to rent and live after they lose their house. christiangustafson-foreclosures impact far more than the borrower who could not make their payments. Foreclosed homes impact neighborhoods and communities as well. Unless the borrower committed fraud, I feel very badly for them facing foreclosure and I would not rejoice in it. Kary, I’ve heard stats on CNBC that many of the troubled home owners are paying credit cards before their mortgage because they’re wanting to have funds to rent and live after they lose their house.

christiangustafson-foreclosures impact far more than the borrower who could not make their payments. Foreclosed homes impact neighborhoods and communities as well. Unless the borrower committed fraud, I feel very badly for them facing foreclosure and I would not rejoice in it.

]]> By: Kary L. Krismer http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222890 Kary L. Krismer Thu, 06 Dec 2007 15:48:22 +0000 http://raincityguide.com/2007/12/04/new-hope-program-to-curb-deliquencyforeclosures-fraught-with-problems/#comment-222890 I think one thing the doom and gloomers don't realize when they point to resets of rates and predict rising foreclosures, is what people will do to stay in their homes. Back when I was practicing law it was amazing to me the sacrifices some people would make to stay in their home. I'd suspect the rate resets will end up hurting the credit card companies more than the mortgage companies, because between the two people will stop paying credit cards first. Also, they can file bankruptcy and get rid of the credit card debt (typically) and then continue to pay their mortgages. I think one thing the doom and gloomers don’t realize when they point to resets of rates and predict rising foreclosures, is what people will do to stay in their homes. Back when I was practicing law it was amazing to me the sacrifices some people would make to stay in their home. I’d suspect the rate resets will end up hurting the credit card companies more than the mortgage companies, because between the two people will stop paying credit cards first. Also, they can file bankruptcy and get rid of the credit card debt (typically) and then continue to pay their mortgages.

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