>Under the provisions of the CARES Act, individuals with federally backed mortgage loans who are experiencing financial hardship due to COVID-19 can request a forbearance period by contacting their mortgage servicer. Federally backed mortgages include FHA, VA, USDA, Fannie Mae and Freddie Mac.
>The CARES Act provides for affected borrowers to defer their mortgage payments for up to 180 days. Borrowers also have the right to apply for an extension of another 180 days of forbearance. There will be no penalties or fees added to the account, although regular interest will still accrue.
Not all mortgages are backed by the federal government, but if you’re serious about not being able to afford your mortgage you should look into yours, and check to see if your state has any resources too.
I’d suggest searching the terms “foreclosure” and “acquired immunity” in the text. If you find it to be up for interpretation, I’d love to see your take.
> I believe that is the case in some states as well (but not California). They get to repo the house, sell it and then can sue you for the rest you owe.
Even where allowed in the US, they tend (not always, it varies by state) to increase the judicial oversight of (and thus extend timelines for) the foreclosure sale, and often reduce the finality of a foreclosure sale by providing a post-sale redemption period. Both of these things are things that lenders might prefer to avoid in many cases where a deficiency would, in theory, be available.
"things like this will only worsen it because people will be foreclosing on large numbers of housing properties because they were used for investment" Thats only the property was purchased with debt (mortgage). If these investments were not purchased with debt then there will be no foreclosing.
> but please explain the injustice of foreclosing on someone who isn’t paying their mortgage
You can read more about the fraud here[1] but in short Wells Fargo (and others) wrongfully foreclosed on homes that were owned by someone who:
- was not in default. i.e., They were, in fact, paying their mortgage or in some cases had even completely paid it off.
- was entitled to protection under the Servicemembers Civil Relief Act. Most often, active duty military personnel stationed overseas.
- was entitled to foreclosure protection under federal bankruptcy laws.
- had entered into a written modification agreement with the bank and had been abiding by the terms of that agreement.
- was wrongfully denied a mortgage modification or requested a mortgage modification and received no response.
In addition, there were many cases where the institution had an obligation to engage in loss mitigation efforts with the borrower (modification, short-sale, cash-for-keys, etc.) and failed to do so.
> Bear in mind that if you lose your home insurance and don't sign a new policy, a lender can and usually will foreclose upon it.
But if this happens in sufficient numbers, then lenders will likely rethink that policy. No lender wants to foreclose, and particularly if there's no chance that they'll be able to sell the property for enough to cover the costs of foreclosing.
"Noting also that this played out over many years."
Not so. The article states the liens can be sold after a year and foreclosure initiated after an additional 6 months. In several of the cases listed, the original home owner was in hospice care or otherwise unavailable.
I don't disagree that the city needs a way to recoup unpaid taxes. But, there has to be a better way than this.
The article kind of contradicts itself. At one point it makes the following claim (which is also implied by the article title):
The foreclosed homeowners are the ultimate victims of the bid-rigging, federal investigators said. Any money earned at auction beyond the debt owed on the house is supposed to be returned to the former owner.
But then goes on to say:
As banks felt the burden of holding so many homes, they held a fire sale and began asking even less than what was owed on the properties. In 2009, the average asking price dropped 57 percent below what was owed on the homes, according to Property Radar. These heavily discounted homes flooded the auctions.
If the bank is getting less than they are owed then the foreclosed homeowners were never going to see any money anyway since there was no extra. Those homes were going to be purchased below debt level regardless of who was bidding and whether they were going to flip it right away to "the Group." Banks are not in the real-estate business. They are in the money business. Most foreclosure sales are the bank trying to cut its losses. They can write off a few grand easier than a few hundred grand.
> people were foreclosed on when they should not have been
That's not what happened here, though; the homeowner managed to avoid foreclosure despite not servicing the mortgage, precisely because the banks messed up the paperwork.
There are victims in the overall saga: people who were missold mortgages that they were never going to be able to service, at rates higher than they were entitled to, who lost their savings as a result. But they don't feature in this story.
> These people went into the transaction in good faith. Now, the law gives them the right to invoke the statute of limitations, and the banks knew that when they made the loans.
First, there was no good faith. Note, not a single monthly payment was ever made. And in this case, this particular statue of limitations did not exist when the loan was signed!
Also worth pointing out, the loans are resold to the Fed, so the banks hold no liability, which I guess is why the loan servicers aren't hustling to file a proper foreclosure. It's the taxpayer on the hook for this.
I've been sharing the story, and hearing back, anecdotally, this is a well-known trick called "quiet title" and apparently a form a welfare. It would be extremely interesting to get hard stats on how often this actually happens.
> Start worrying when the banks stop offering mortgages to people trying to buy property in south beach.
Florida is a recourse state, isn't it? That might make whether or not banks offer mortgages a trailing indicator rather than a leading indicator of how risky it is there.
In a non-recourse state (Alaska, Arizona, California, Hawaii, Minnesota, Montana, Nevada, North Carolina, North Dakota, Oklahoma, Oregon, and Washington), if the borrower stops paying their mortgage the bank can foreclose and sell the property, and that ends the borrower's obligation. If the proceeds from the foreclosure were less then what was owed too bad for the bank. That's all the get.
In a recourse state, it starts out the same. The bank forecloses and sells the property. But in a recourse state, that only ends the borrower's obligation if the proceeds are enough to pay the remaining debt. If they fall short, the borrower still owes the difference. The bank can go after assets other than the property, or can go for wage garnishment, or both.
I've seen no evidence that this is true. Do you have a source?
reply