I live in a nice, seemingly safe middle class neighborhood in a 1700 sq ft. six year old house.It's on a large lot at the edge of a small city,( 30,000 pop) with farmland on two sides and a clean river one half mile away.The weather is rainy but mild, rarely getting below 30 in the winter. The nearest big city is 110 miles away;(Portland, OR). I'm comfortable, don't wanna move. My concern is if the economy crashes;( 30s type depression, stock market crashes, massive unemployment and deflation of property values), am I gonna get forclosed on and evicted??????Maybe not!!here's why:If millions can't pay mortgage or rent, is the government gonna enact anti-foreclosure and anti-eviction, (for non payment of rent) legislation, as is rumored? Or are they gonna allow tens of millions of renters and formerly middleclass homeowners to be thrown out on the streets, living in tents??? I Can't think of a more volatile recipe for social chaos, (or political suicide!). Also, with my mortgage holder on the East Coast,and with the banking system and coms in chaos,how's he gonna know who's paid and who hasn't.How's he gonna get and transmit a foreclosure order across 3000 miles.The courts will be backed up and in chaos as well.Are the police gonna ignore serious crime to carry out tens of millions of evictions??? of neighbors, family and friends? ( and of the most heavily armed citizenry in the history of the world). In the 30s, most mortgages were held locally, on paper,by a banker who knew his clients personally. (Remember, "It's A Wonderfull Life"?) Even if things get back to some semlence of normal, and my house is worth only a fraction of it's current market value, are the banks gonna want to repo tens of millions of houses or might they be willing renegotiate the mortgage on terms more realistic to the newer lower values????In any case, I'm gonna buy some gold and silver as a hedge and maybe buy my house for 10 krugerrands after the hammer falls!........COMMENTS???

-- Ralph Kramden (OrBusman@webtv.net), June 15, 1999

Answers

If millions of people stop paying their mortgage, that will cause the mortgage companies to go under. They too have payment obligations just like the home owners and if they cannot pay those payments, they all may go belly up! If your mortgage company is no more, WHO ARE YOU GOING TO PAY???

-- freddie (freddie@thefreeloader.com), June 15, 1999.

I oce read part of an article that stated that Uncle Sugar's game players were interested in this very subject. They tried it every conceivable way and it

-- Greg Lawrence (greg@speakeasy.org), June 15, 1999.

I sure wish I had anywhere near what you have. I just moved here (to Oregon) from CA. I left my 2700 sq. ft. home into foreclosure it hasnt happened yet but any day now. I felt like I had to move for the safety of my family. I have 5 children (4 of them girls) and CA. just wasnt the place to survive Y2K. I am in a pretty large city now but am hoping to move to a small town soon. If anyone knows of a rental out there in Albany , Lebanon or the smaller surrounding areas of Salem please let me know before my foreclosure goes on my credit record, as landlords look at those as well as mortgage lenders do. Im hoping those mortgage lender folks lose my name . Also if theres anyone who wants me to quick deed my home to them feel free to e-mail me .You do what you have to do! My home is still for sale but I will do whatever I need to to get rid of it. Please remember if anyone knows of a place for rent let me know. Thanks Former Home Owner

-- Jon (Avisandj@aol.com), June 15, 1999.

If the excretia hits the rotating air handler TEHTRAH) (8 or 9), plan on working with your lender. If almost everyone is out of work, lenders will be more than willing to work out accomodations. If it's a ten or higher, mortgage payments will be the least of your worries.

-- Mad Monk (madmonk@hawaiian.net), June 15, 1999.

Abank would sooner have you in the house, than an empty house. At least they have a change of repayment with you there.

-- FLAME AWAY (BLehman202@aol.com), June 15, 1999.

There is a series of Supreme Court cases against legislation to relieve or defer debt in hard economic times. The cases date back to some of the earliest cases in the Court, with a resurgence in this century.

Basically, such laws were determined to be unconstitutional under the argument that they created a prohibited "taking" of property from the lender. One rationale I remember was that the Court stated that highs and lows in the economy were cyclical. There have been many severe depressions in our history and the present one at point ("Great Depression") did not justify exceptional legislation.

If I get the time, I'll pull the citations if anyone is interested.

-- marsh (armstrng@sisqtel.net), June 15, 1999.

They took um in '29, they will take um in 2000. If you do not own a home try to find a good used RV. A cot in the school gym is the only alternative for a lot of people who don't own property. If you can find a place to park it, it can make for pretty comfortable living in a pinch.

-- BiGG (supersite@acronet.net), June 15, 1999.

Payment deferments by lendor agreements may be an option in NORMAL times. The obligation to pay and proof of payment will still be incumbent upon the borrower.

In the American democracy, citizens have been Pavlovian-trained to look for solutions from gov.orgs FIRST because we all want fairness and equity. After all, it's not fair that we should have to lose our homes because (1) those programmers screwed things up and (2) capitalist business management was too short-sighted and greedy to solve a simple date-formatting problem given decades of awareness and opportunity. It's irrelevent that I made an adult personal decision to take a risk and borrow money to buy something I couldn't pay for at the time of purchase. I bet: (1) the economy (my economy) would remain "normal" for the term of the loan and (2) I would all payments when due. It's just not fair for THEM to take my chips because of something THEY did.

There will not be legislation to prevent foreclosures. Threat of mass foreclosures will present a wonderful opportunity for our freely- chosen, favorite form of self-government to do what it LOVES to do - show how the Great White Father in Washington cares about us and CAN SOLVE OUR PROBLEMS COMPASSIONATELY.

Two formats for solutions suggest themselves. The least likely for mass acceptance is "transfer of title in lieu of foreclosure." I say least likely because it takes gutz and few people will know how to handle the timing. If anyone actually has the means and opportunity to make any payments, it is most likely that they will do so until all personal liquidity is exhausted, betting that everything will go back to "normal" in less than 90 days. More likely, liquidity will be exhausted before taking action and the consequences of accepting personal responsibility will be much, much harder.

The more likely format will involve a form of "equity sharing" or "joint tenancy" provided by existing legal real property ownership models. This model will be readily accepted by both lendors and borrowers exactly because (1) lendors really don't want your house instead of your interest - they'll lose money and (2) borrowers have a perception their homes belong to them and will quickly sieze any solution offered to preserve this perception. The new "non-resident joint tenant" will be a government federal housing authority. The deal = you stay and pay on a "from each according to his means" principal and the fed housing authority gets the title.

The catch-22 in the government's solution is a no-brainer to predict because it's already in place. That's the real beauty of this stuff, you don't have to invent anything, it's all "off the shelf" legal technology. Just like in other public housing, you get to stay in your "home" as long as (1) you don't allow criminal activity to take place in the home and (2) you don't become a felon. Old world order example = eviction of crack house residents. New world order example = gun possession or violation of other residency rules voluntarily signed at the time of agreement. Of course, the last rule on the list is "and any other rules deemed necessary by management/fed. housing authority for the general welfare and safety and adherance to applicable public policy." Of course, constitutionality arguements won't apply at that point because it's entirely legal for your to contract away your rights under "special circumstances." We do it now all the time. Ever try to board a plane with out I.D.? Want to get caught in possession of a gun within 50' of a school? (I don't thinnnnk soooo!)

While trying to analyze this stuff isn't particulary challenging and is sort of fun in a way, what's less fun is the next logical step. Where do you go after you have been evicted from your "perceived" home? Maybe you left voluntarily and not under immediate housing authority duress. What if you left under "felon status" with the rest of your family as "accomplices" or "co-conspiritors" under existing criminal conspiricy laws? Hmmmm, the prisons are overcrowded now and this is NORMAL.

Have a nice day.

-- Procopious (valleycable@earthlink.com), June 15, 1999.

Just to add to what Procopious said. If order remains or quickly returns to a state where there is high but managable unenployment the governemtn will do what the governemtn has always done during my lifetime, try to inflate it's way out of its mess.

Anybody remember the so called Savings and Loan crises? Anybody here bother to "follow the money" on that? The way the FSLIC was set up and SUPPOSED to operate was that if an S&L got into trouble, they were closed down, the FSLIC paid off the depositors, took over the loans, and the owners of the S&L got nothing. This is "fair" to the ex-owners because they were the ones that drove the thing into the ground in the first place.

Well if the S&L owners are big campaign contributors something more "fairer" simply must be devised, the Resolution Trust Corp. The RTC purchased the worthless and dubious loans from the S&L's, various exotic smoke and mirrors were employed to allow politically conected S&L's to buy out other S&L's even if they were both in sad shape. Example, payment for another S&L above market value (remember many had negative value) was counted as goodwill, a positive asset. Let's go over that again - if you pay $1,000 for an S&L that has a negative value of $10,000, you get to record on your balance sheet an asset of $11,000. Folks, I'm not making this up! Needless to say this is wildly against all forms of normal accounting standards, but since the government can do what the government can get away with, and accounting standards are never going to hit the 6:00 news......

So expect a lot of exceedingly creative accounting coming out of various committees, expect the taxpayer to take it in the neck, expect the FOB to prosper.

This of course all assumes that Y2K is going to be bad, but not all that bad. That is something that, based on what is going on at the moment, I doubt will happen. I think it will be worse.

-- Ken Seger (kenseger@earthlink.net), June 15, 1999.

Ralph:

The way it stands now, if you default and the auction brings less than the mortgage balance, the new owner has the property at a discount and you still owe the difference.

If you are hoping for strength in numbers, "everyone is broke", don't count on it. I read in another article that in the 'thirties ninety per cent of the real estate in Detroit was forclosed on.

The bankers don't lose, they have already made their salaries and pocketed their bonuses. The loss is born by the stockholders and taxpayers, while the bankers form a shell and by the distressed property at pennies on the dollar.

Conceivably, they would still hold your debt while owning your former property free and clear at a discount.

Commercial office buildings were bought at auction from RTC that cost USD 150 sf to build for USD 40 sf. in the past ten years or so.

No reason to expect history will not repeat.

-- Tom Beckner (tbeckner@erols.com), June 15, 1999.

You might want to check out this proposed y2k mortgage protection law, in Colorado.

Senate Bill 99-170 would limit foreclosure or default proceedings against people who, because of a Y2K computer glitch, were unable to make their mortgage payment or cash their paycheck.

-- Count Vronsky (vronsky@anna.com), June 15, 1999.

CV - That bill covers only electronic bookkeepping errors or omsions and does not address inability to pay. It probably duplicates existing bills that are basically, if the bank makes an error it is not your fault laws. It just a band-aid feel good see? I'm doing something about Y2K bill.

-- Ken Seger (kenseger@earthlink.net), June 15, 1999.

Take a look at the San Francisco Federal Reserve site giving advice to banks to prepare for a worst case cash need. In particular pay attention to #1 and #2 under Things You Can Do Now to Increase Y2K Liquidity. Looks like the fed reserve is fully expecting bank runs and loan defaults and is positioning themselves (it is a private concern remember) to scoop up assets like a Dustbuster. Someone ALWAYS profits from down times. Didn't the Fed. Reserve just make it easier for banks to lower the collateral needed for their loans... but.. increase the rates charged to the banks for those loans? Loan sharks do very well in tough times.

-- Linda (lwmb@psln.com), June 15, 1999.

Oops.. forgot the link:

http://www.frbsf.org/fiservices/cdc.local/cash/contingency.html San Francisco Federal Reserve Y2K Liquidity Contingency Planning

-- Linda (lwmb@psln.com), June 15, 1999.

Then there is the other side of the coin. We hold two mortgages in the State of Washington. Both are small farms. Neither of which we are currently receiving payments. One, because the IRS has seized the guy's pay check and the other because y2k is already making a hell of a dent in his business. Two years ago he employed over 50 people, today he has 7. He builds schools and hospitals and nursing homes. No work this winter because of the bad (wet) winter and now contracts that he had for Spring are being cancelled. Construction is being put off for y2k remediation/preparation. We are just so grateful that we are not dependent upon those payments. And though we don't tell the buyers this, we would not dream of evicting them. We sure don't want to have the places back, would not care to see two families out in the cold. We are just so fortunate that we don't have to worry over those payments. Its like SS. I got my first check this month and I feel like I am getting a present. I will enjoy it as long as it lasts, but I won't depend on it.

Gotta go buy more jars and get those turnips canned. Then harvest the bean seeds and then turn the chickens in. That will be the end of the garden until early Sept when fall and winter garden starts to get planted.

Gotta sharp hoe??

Taz

-- Taz (Tassie @aol.com), June 15, 1999.

Our answer was to have 3 months of mortgage payments saved in cash- yes getting it properly credited may be a problem BUT if you can show the holder of the mortgage you actually can pay- much better negotiating seems possible. If you haven't already done so make sure you get a fixed rate in case we do get hyperinflation ala Germany.

Another thought and concern we haven't solved yet. What if you can pay but there is no way to get the money to the mortgage holder? Office closed mail etc down. You just know that some of the low life companies will go ahead and attempt to initiate court proceedings regardless of any paperwork you have to prove you actually did pay or made attempts to pay then all the legal expenses etc must be bourne by you.

Rather like dealing with the IRS even when you are 100% in the right- much worse when normal systems are messed up.

Don't think we should plan that all money collection etc system willl fail immediately- just not the way it is.

EC

-- EC (JHnck1776@aol.com), June 15, 1999.

Buy low; sell high. Property passes from weak hands to strong hands. Every generation or so, the powers that be create or take advantage of an economic situation (to weaken the middle class) so as to accrete a large percentage of the wealth generated since the last situation. The object is to make us all niggers (regardless of race) -- slaves or sharecroppers/tenants on the government-banking plantation.

-- A (A@AisA.com), June 15, 1999.

A@A you meant Niggards....

"maybe buy my house for 10 krugerrands after the hammer falls!........COMMENTS??? "

You will buy 100 houses for 1 krugerrand, for 10 you will buy the bank. There is only one hitch... Gold is not money. it is worthless, it's value only goes down... right? (bwahahahahhaha!!!)

-- otay (spanky@lilrsacles.com), June 15, 1999.

Agree with Tom Beckner, above. My house's value in Anchorage plunged 50% in the mid-eighties oil "crash" (fortunately paid for and rented out - income before, income after). Many people had a balance of debt twice the value of the property in the crash. The banks worked out no deals. They forclosed. People walked away from the equity in their homes.

If our society largely ignores street people now, in a depression, why would attitudes be different just because the middle-class gets hit?

Look at the PR campaign now, do you think they have your interests or the BANKS interest in mind with their "don't take cash out of the bank"? Why would the priorities be different in a depression?

Some recommend getting out of debt, or taking out as much debt against a property as possible, and being prepared with a plan B if forclosure happens!!

Best of luck....tough times bring tough decisions...

-- Leslie (***@***.net), June 15, 1999.

If there is a 'bank holiday' (and it seriously looks like there will be) then there will be no one in your bank to process payments OR file forclosure suits.

If your bank does find a way to file a forclosure suit you can ALWAYS fight back in court, sue them for emotional distress, claim unfair trade practices, etc. There are a million things you can do in todays legal system to postpone them from evicting you (including filing for bankruptcy which AUTOMATICALY STOPS ALL COLLECTION ACTIONS AGAINST YOU FOR 4 MONTHS). And if there are alot of people being forclosed on it'll be YEARS before it ever gets in front of a judge.

Hell, I was suing some folks who declared bankrupty (which moved the case to a bankruptcy court) then at just over 3 months withdrew their bankruptcy pettition (moving it back to federal court) then declared bankruptcy AGAIN two months later to start the whole thing over. And you know what? It was all absolutely legal...

-TECH32-

-- TECH32 (TECH32@NOMAIL.COM), June 15, 1999.