Originally Posted by trumptman
First, they didn't foreclose on a home worth $109,000. They forclosured on a home worth $49,000 with a $109,000 loan on it.
It was sold by the bank for $20,000 because it likely was not left in new or sellable condition or else the bank would not have left $30k on the table. The bank is not going to rehab it because they are in the lending business, not the remodeling business. The bank does service the mortgage or else they wouldn't have been able to foreclose.
The family gets to walk away from an overpriced asset with no debtors prison or other nonsense hanging over their head. There is no judgement or garnishment of their future earnings. They get a little mark on their credit.
In two or three years after renting a house at a reasonable price rather than paying too much for an overpriced mortgage, they now buy a home with their repaired credit and with 20% down. They will probably pay a whole quarter to half percent more on their interest rate as "punishment" for their sins.
I don't know about you but I would much rather pay 6.5% on a $50k note than 6% on a $109k note.
God Bless America indeed.
They foreclosed on a home with a $109,000 mortgage on it that was affordable before the interest rates doubled, tripled.
But like so many foreclosures, there was no recourse to renegotiate because there was no single mortgage holder.
The house was sold at auction for $20,000 and listed by the new owners at $49,000.
Likely not in sellable condition is spin, you don't know this as fact.
Do they get to walk away?
Deficiency doesn't come into play because the bank lost money in the public auction?http://www.foreclosures.com/pages/state_laws.asp
Defaulting on a mortgage in the States takes only two or three years to repair your credit?
You didn't reply to renters caught in all this.
There are renters that wanted to buy the property that landlords defaulted on but banks weren't interested.
They were told to vacate and bid when the property is auctioned off.
In whose interest would it be to gamble, in a sluggish market, that an auction would recover a significant portion of the loan?
Makes you wonder who's gobbling up these homes at fire sale prices.