Mortgages after the Hammer falls!

greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Thanx for all the responses for my earlier thread on foreclosures and evictions.But; many made reference to earlier depressions like the 30s and regional depressions in the eighties. But I contend that those examples don't apply in that here we are talking a massive depression accompaning a massive computer collapse and the loss of all kinds of financial data.In the thirties, debt holders were largely local and the records of who owed what were on PAPER in filing cabinets. Those records didn't disappear because some computer went bonkers! Banks used to take up whole blocks with many floors and thousands of filing cabinets serviced by an army of clerks. Now banks are no bigger then a 7-11. They can't have all their records on paper and if the computers go down, (and the power and phones are intermintent and there is shortages of everything, and the financial system is in chaos and there's riots and martial law in the major cities). HOW ARE THEY GONNA KNOW WHO OWES WHAT??? We are all being warned to have hard copies of bills, bank and investment statements, reciepts of payment etc. That's presumably because the banks and debt holders DON'T have hard,ie. paper copies and their computer info is vulnerable to being totally lost. Can the info be regained or is it lost for good? Come on you brainiacs! I'm a humble bus driver and I'm trying to sort this out! My mortgage holder is 3000 miles away in a big east coast city. Is he or his employees gonna fight thru rioters to get downtown to what may be a burned out shell of a building, to see if me and thousands of others have paid my mortgage payment? If the courts are jammed with y2k suits plus millions of civil and criminal cases, is it gonna take him years to get a foreclosure order? If you owe a bank 100,000 dollars, it has you by the balls! If you owe a bank 10 billion dollars you have IT by the balls! I contend that tens of millions of highly educated, formerly middle and upper middle class americans holding trillions in debt are a force to be reckoned with by the government and financial system.They will not go quietly into homelessness!You can't compare them to today's homeless who number less then a million nation wide.I haul them every day and they tend to be poorly educated, mentally ill and alcoholic. In short; powerless! I suspect that financial institutions gonna have no choice but to renegotiate mortgages or else you're gonna have millions of vacant homes bringing in NO revenue and tens of millions of americans living in tents;a receipe for social explosions and political suicide to the party in power! Also, one of you mentioned borrowing the max against my equity as a hedge. Sounds interesting. What are the implications, given various senarios????

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

Answers

I am being a smart ass here, but if you have property you could rent to the bank to park all their repossesed cars.

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

Hey Ralph!

Those nasty big ol' computers have LOTS of reliable backups, on both magnetic and optical media. The records won't be lost, but processing them could be problematic if world-wide depression ensues (or worse, war). Bank records generally have both onsite and duplicate off-site backus (in case of fire, flood, etc.).

Say hi to Alice, Ralphie Boy!

-- Norton (Norton@HoneyMooners.xxx), June 15, 1999.


As Decker will vouch, I'm no economist, but here's a guess:

1-4 Some default. Foreclosures similar to 30's

5-6 Significant default. Foreclosures, the ones that eventually make it through the legal process, take years.

7-8 Massive default. Re-negotiation of existing mortgage contracts.

9-10 Complete collapse. Possession becomes 10 10ths of the law.

-- a (a@a.a), June 15, 1999.


If folks lose their jobs, can't pay their mortgages and are in default, there will be plenty of company. The bankers I know carry more debt load than I do and will be plenty busy sorting out their own problems.

-- Jill (jdance@mindspring.com), June 15, 1999.

Our banker stated they couldn't possibly repossess all the houses. If they were all empty they would be ramsacked. They would have to let people work things out.

-- Moore Dinty moore (not@thistime.com), June 15, 1999.


Ralph:

Your daydream is self deceiving.

You do not own your home. You will own the deed to it when the lien is satisfied.

To retain possession of "your" property, you will have to have a clear title or deed in your hand. Period.

Otherwise, you will have to demonstrate (prove) you have maintained your mortgage agreement.

If you default, at his leisure, the lein holder or his assign will walk in to your place and have you removed or have the authority to remove you. Period. He will then have the right to buy the property himself or through his assign, probably at pennies on the dollar.

You will still owe the unpaid balance of your debt, and he will be collecting a new mortgage on the same property at the same time from someone else. And if they default, the process repeats and he will have three debtors paying on the same property. And so on and so on.

Ralph wrote:

" I contend that tens of millions of highly educated, formerly middle and upper middle class americans holding trillions in debt are a force to be reckoned with by the government and financial system.They will not go quietly into homelessness!"

They have done so before and will again. In the scenario you are counting on, however, these millions of your supporters will not be alive to join in league with your scheme.

In the real word there is no free lunch, only the people that promise them and the people that fool you into believing there are.

There is a distinction between soliciting charity for others and soliciting others to conspire in fraud for your personal gain.

Millions of your brothers in the same predicerment will be of no legal assistance to you. Deal with the contract(s) you have signed and quit hoping for someone to relieve the burdons you have committed to.

If you want to wish really hard for a windfall, wish for a winning lottery ticket.

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


Ralph:

I refinanced all the equity out of my house.Not because I want to screw the bankers. I just thought if Y2K turned into a depression my house would fall in value 50-60%. I have worked too hard and put a lot of money into my house. If y2k is no problem, Fine I will pay house off.The money is here to purchase at financed value, or lower value. This aint trying to rip anyone off. The banker gets my interest etc. Its prudent to protect yourself like they do when you want a loan. Your house, car, kids,dog etc. They don't sign anything for me or tell me how good their credit when I deposit my money into their bank.

Either way, roll em Ralph.

-- Lon (Lon1937@aol.com), June 15, 1999.


Add this in, when your house is repossessed and then sold at auction, the difference between the auction price recieved and your total mortgage is counted as "income received" (by you) for the tax year by Uncle Sam and you owe taxes on said amount!

"What a country"

-- jjbeck (jjbeck@recycler.com), June 16, 1999.


No power, no records. You figure it out....

Anon

-- anon (funny@money.com), June 16, 1999.


Tom said:

"You will still owe the unpaid balance of your debt, and he will be collecting a new mortgage on the same property at the same time from someone else."

I think this is incorrect. It is my understanding that in a home mortgage loan, the property is the collateral. When the property is foreclosed, you forfeit the property and all equity. Your credit may be shot to hell and you may not qualify for a loan ever again, but you no longer owe anybody on the mortgage. This is why you pay mortgage insurance on loans that do not have around 20% equity.

-- a (a@a.a), June 16, 1999.



I think that mortgages operate much the same anywhere. 'a' has it right, with the added proviso that if the equity exceeds the amount of mortgage + penalties, the previous owner gets the remainder of the money. In Canada, we don't pay tax on that money, because we use taxed money to pay for our mortgages.

This is an area that truly concerns me. We have a small mortgage on our house, but not one that we can pay off (unless we stop all preps, and live VERY frugally - now too late even for that). In my mind, the likely scenario is mid-ground which is most apt to cause defaults. If we default, we are more likely to be fore-closed because even if prices plummet, our mortgage is currently only about 1/10th the value of the house. I'm seriously considering renewing our mortgage as an open mortgage for the highest amount possible late this year. If all goes well, we'll be able to pay it back down and owe only a few thousand in interest. If TSHTF big time, our property won't be so much more appealing than others to foreclose on as they won't get any more of their loan back on us than they would from anyone else. Also, we'd have the money to pay on the mortgage for some time, maybe long enough for things to return to normal enough that we'll have jobs again. Now, to persuade my DGI husband (who, like me *hates* to be in debt)...

-- Tricia the Canuck (tricia_canuck@hotmail.com), June 16, 1999.


Re: Mortgages

In Larry Burkett's book, the Coming Economic Earthquake, he cites how one couple lost their home to foreclosure in the Great Depression because they couldn't pay the mortgage. This couple had enough money to pay the mortgage but they couldn't access it because the banks were closed. So this couple had money in the same bank the mortgage was owed, that bank refused to give them access to the money, so they couldn't pay their mortgage, so they the lost their home.

Larry Burkett also cites the example of Germany's hyperinflation before WWII. In hyperinflation, the currency doesn't buy as much, so more and more money is printed with higher amounts (a hypothetical example -- as if our our lowest bill the $1 were replaced by a $100 bill.)

However, the banks would have gone out of business if every depositor could have paid off their mortgage or loan with worthless, hyper-inflated currency. So they got the government to agree to index the debt to the inflation rate. The government did so because it feared total collapse of the country if the banking system were allowed to fail. However, because the average worker's wages weren't indexed to the inflation rate, they soon lost everything they had.

Larry Burkett was wrong about his prediction of economic collapse by 1996. What I did take from these examples, however, is the fear that that the government will side with the banks, over the homeowner.

-- AllIKnowisWhatIRead (pemorris@bigfoot.com), June 16, 1999.


Moderation questions? read the FAQ