Sign of the times...

[genrex]

The number of perfectly good houses that are being torn down is really shocking.

Rather than reduce the principle so a family can make the payments and stay in their home, the banks use the foreclosure-and-eviction process to kick families out of their homes. Nobody keeps track of where those people go; many of them become homeless. The house then stays empty and does not sell, and then it becomes an eyesore and gets torn down. The stated purpose for doing this is that the property values of neighboring homes remain propped up. For the banks, this process takes priority over the families that were kicked out of their homes. But keeping the housing market artificially inflated in this manner is guaranteed to prolong and exascerbate the social problems caused by the housing bubble.

I don't understand why the banks are willing to take a total loss on a perfectly good house, rather than re-write the principle to a lesser amount, for the good of the families and the community.

Is it always all about the money?

_

[fintstone]

It happened in lots of places. I am about $350K underwater on a home. I keep making the payments hoping some day things will get better. Sorta feels like putting money down a garbage disposal...

[Rick Lee]

Originally Posted by genrex

Is it always all about the money?
_

If you run a bank, yes, it is always about the money. Why else are they in business? Do you invest your retirement money in a non-profit? And if you're unemployed, how much house payment can you afford and for how long? 99 weeks? Is that worth a loan modification? Why would a bank cut your princ. and payments down and then expect their other borrowers to keep paying theirs at full rate?

[Jim Bremner]

This bumper sticker was pretty popular 20 years ago. I'm surprised that it hasn't come back.

[Rick Lee]

Originally Posted by Jim Bremner

This bumper sticker was pretty popular 20 years ago. I'm surprised that it hasn't come back.

Yeah, maybe buying a Chevy Volt would make things better.

[Brando]

Not to PARF this up (hard to as we migrate to the aspect of banks screwing over people) but it really does come down to the money. A bank would rather have 100 promissory notes over-valued by 200% than 1000 re-written to 'actual value'. It comes from the fact that they can create up to 10 more imaginary dollars on every single over-valued dollar on that mortgage.

So yes, the banks don't care. Their endgame is to own all the property and have almost all the money.

Government(s) could mandate that mortgage principal values must be able to be appraised down (when a property loses value) but only the bank suffers - and I guarantee you they would not allow it.

[Rick Lee]

Originally Posted by Brando

Government(s) could mandate that mortgages principal values must be able to be appraised down (when a property loses value) but only the bank suffers - and I guarantee you they would not allow it.

Really? So even though the bank loaned $300k on a property that was worth $360k at the time, they should have to accept less repayment for it if the value decreases? Wow. I wonder if they can demand higher payments when the value increases too. Shirley, you can't be serious.

[genrex]

Brando's idea is perhaps the long-term solution to prevent this from happening again, but politicians have too many fingers in the "property value" pot to allow that to happen. Dang, that sounds political.

And don't call me Shirley...

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[Brando]

Originally Posted by Rick Lee

Really? So even though the bank loaned $300k on a property that was worth $360k at the time, they should have to accept less repayment for it if the value decreases? Wow. I wonder if they can demand higher payments when the value increases too. Shirley, you can't be serious.

Rick, I didn't say I agreed with it. I just put it out there as a solution. Is it the right one? No. Would I do it? Hell no. But then again, I wouldn't (and didn't) buy a property that was severely over-valued.

[flatbutt]

The city also loses tax value when a property is downvalued. But they lose more whenthe house is torn down. Seems to me a city has some reason to enter the discussion.

[Rick Lee]

Originally Posted by Brando

Rick, I didn't say I agreed with it. I just put it out there as a solution. Is it the right one? No. Would I do it? Hell no. But then again, I wouldn't (and didn't) buy a property that was severely over-valued.

Buying an overvalued house has nothing to do with any of this. If you lose your job, it doesn't matter how much your house is worth. You can no longer afford to make the payments. I don't see anyone here claiming they shouldn't have to repay a car loan in full once they drive the car off the lot and lose 15% of the value, let alone diminished value after an accident or lots more mile, wear and tear. Just because a house doesn't appreciate doesn't mean the bank shouldn't expect a loan to be repair. With the inflation we're going to have in the near future, repaying loans with cheaper dollars will have a similar effect to getting a reduction in principal. But at least that's the market at work and not some silly law forced on banks by politicians. Well, actually the inflation will have been forced on all of us by politicians' overspending, but that's another thread.