Passing judgment on distressed homeowners?

By
Mortgage and Lending with Effective Technical Group, LLC

Alright, quit it with the moral argument already.  A person's primary responsibility is to take care of their family's basic needs.  Too many families are struggling to keep their children fed and to keep their healthcare costs paid.  The deadbeats with no ethics left this market a long time ago.  Those investor speculators that started dumping their depreciating asset at the first sign of the market downturn are long gone.  Unfortunately, because of them, property values began their downward spiral.  Moreover, because the banks did not take responisibility for their actions and did not act quickly to get the distressed properties turned over to responsible owners through quick foreclosures or quick short sale approvals, neighborhoods and communities deteriorated quickly.  Those homeowners that continue to pay for their mortgages despite the depreciation of the property are stretched thinner and thinner.  Because of the distressed properties and the banks' continued slow response to the crisis, the homeowners that are paying have to pay more.  The costs for maintenance, association fees, community district development grants and property taxes continue to escalate because there are less people paying these shared expenses.  This all in an environment of deteriorating services and neighborhoods in disrepair.  Not only are many people living on lower incomes due to the bad economy, their costs are increasing and their property values continue to plummet.  This is pushing many to the breaking point and adding to the defaults.  Those of you still on the moral responsibility bandwagon will be affected by the same market forces eventually as there is no stop to the spiral.  The next wave of foreclosures and distressed properties is going to be higher than what we've seen so far.  The next ones to default want a responsible option but there is none in sight. 

Comments (44)

Kathy Opatka
RE/MAX CROSSROADS - Ocean City, MD
Serving Ocean City, MD, & The Delaware Beaches

Good points, Diana!  I think if we ALL remember that we're ALL in this TOGETHER (as part of the human race!) and HELP each other, we'll come out on top!

 

Feb 13, 2010 06:03 AM
PHIL MCGREEVY
Chesapeake, VA

As I said in a similar blog:

Most Corporations, Wall Street, Banks, and Insurance Co. 'HAVE A PERSONALITY' similar to a PSYCHOPATH.

On the outside they can have charm, beauty and a seductive smile but on the inside well.......

The 'SYSTEM' is set up also so these parasitic psychopath's are basically free from any fear of consequences.

Those in Washington that are there for 'THE PEOPLE':)lol  most have sold their soul's and us out.

In truth those high on the food chain in these 'PSYCHO' ENTITIES have the problem[and are the problem]

not the average human who despite no justice and fair play get up and live great lives in loving relationships

with spouses, family, and friends showing great character that 'ANIHILATES' THE EVIL WITH THEIR GOOD.

TYLER it's your fault you got me started:)

PHIL

Feb 13, 2010 06:13 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Blame and judgement are useless emotions and hold us back. I feel sorry for these distressed homeowners, not judgement. Can you imagine anything worse that having to lose your home and move your family?

Feb 13, 2010 10:00 AM
Joan Lorberbaum Moore
Lang Realty - Delray Beach, FL

All good points, Diana! Thank you for this post. I liked it so much that I reblogged it.

Feb 13, 2010 10:07 AM
Jack Fleming
Weichert, Realtors - Wayne, PA

Great posts Diana. But think it's time to find better solutions to an ongoing problem. I have a few suggestions.

Here they are in no particular order:

1. Pass legislation requiring banks to close short sales within 90 days of the property being declared a short sale. Think of all the sales it would create. And those new homeowners would buy goods and services and go out to dinner and buy tires for their rapidly againg cars to take them to the store to buy more goods and services. But I digress.

2. HOA's have to bite the bullet along with the rest of us. HOAs will be allowed to recover no more than three months worth of fees at settlement. This way they can't stop sales of distressed properties. Granted dues will go up but wouldn't be nice to have more homeowners paying those dues.

3. The pendulum has swung to the other side regarding home loans. A few years ago lenders would grant mortgages to just about anyone. Today they want everything short of a blood test to get a loan. Take the money they are sitting on and loan it to resposible homebuyers.

4. Require banks to use it or lose it when it comes to the TARP money. Congress has granted the banks access to b hundereds of billions of dollars of our money. Yet the banks are reluctant to invest the money with responsible homebuyers.

5. While I'm on a roll Mister banker you know those bonuses you have been paying your overpaid executives, Give it back. We did not give you permission to divy up your ill gotten gains with your buddies.

I'm sure this will go over big. I'll be expecting the black helicopters over my home tomorrow morning.

Feb 13, 2010 12:16 PM
PHIL MCGREEVY
Chesapeake, VA

Gary and April wrote;

"What I don't get is the argument that you should walk away from responsibility when you just no longer feel like paying for something that has lost value.  If we all had this attitude...there would be nothing that we would continue to pay for.  Cars, boats, rvs.....Hardly anything we purchase has any potential to increase in value."

I understand your good intent in this paragraph and that last sentence may well be true at least I believe it

in 'life's sense' all material things have no true Universal[eternal] value. But do you tell your Real Estate investors and clients that line when working with them:)?

And as to walking away and not taking responsibility, what has wall street and the Banks done?: and I don't remember anyone bailing out homeowners whose homes have no value or'potentential' to increase in value

So creating their own 'bailout' seems a viable option to them.

As miss Streep said in the Movie "DOUBT'

“When you take a step to address wrongdoing, you are taking a step away from God, but in his service.”

so if taking a stand against the 'Creep's' that have been forever raping the value of our material things and quality of life for the love of excesses, somehow makes them treat our children kinder in the future for they see it as a financial benefit well....

I am not a proponent of Capital Punishment but if these Creeps who devastate good peoples life's as routine don't get strung up and put out on display, they will continue raping us all the while [like on these blogs] we hold each other in disdain and point fingers at each other because THE CONSTANT RAPING MAKES US FELL POWERLESS All the while we are pure amusement for the Creeps.

Is this to much for a friendly Real Estate network blog:)?

Hell I don't know how to stop these Creeps, I can only bitch and whine but I do know how NOT TO BE ONE.

As to understanding your fellow's

Picture a cave man with a mean face and a large club in his hand staring[how Do you seem him or feel about him]

Now expand the picture to show a Sabre Tooth Tiger in front of him and a Women and Child behind him

[now how do you picture him and feel about him]

 

PS;

JACK THEY WILL BE MORE COVERT THAN HELICOPTERS

PROBABLY SEND A G GORDON LIDDY TYPE TO 'PRICK YOU' IN YOUR SLEEP AS TO MAKE IT SEEM LIKE A HEART ATTACK:)

 

 

 

Feb 13, 2010 12:21 PM
Diana Cessna
Effective Technical Group, LLC - Tampa, FL

Pete #22 and Jack #29:  Most associations have written in their by-laws that when a lender forecloses, they are responsible to pay only up to 6 months in past due association fees.  This is an underwriting requirement to get a mortgage on a condo.  This wasn't a problem in the past when banks did foreclose quickly.  The way things are delayed now, the fees are often a lot more than that.  I've seen condos that have been dumped sit vacant without anyone paying fees for over a year.  Many cash strapped associations do not have the money for the legal fees required to place liens.  Association liens are subordinate to mortgages but I'm pretty sure that once a lien is  placed the 6 month rule doesn't apply and it has to be paid in full to transfer lien free to a new owner.  Unfortunately, liens are not being placed and once a lender does eventually foreclose, they only pay 6 months of fees.

Feb 13, 2010 12:50 PM
Betsy "Diann" Kirby
ERA Queen City Realty - Plainfield, NJ

Diana,

Great post.   I couldn't have said it better myself.   It's impossible to serve a client well that you are harshly judging them.  Until you have walked in someone else's shoes, you can't possibly know their struggles.   And it's always so easy to blame the 'little guy' who doesn't have firms lobbying to spin the situation in their favor.   The fact is that none of the folk who are now in a short sale or foreclosure situation could have obtained a mortgage in the first place with the knowledge and cooperation of a loan officer, a realtor, and a bank.   Had all those individuals followed the proper procedures and the letter of the law, many of those loans would never have been made.   This excludes those people who did not anticipate a job loss, a medical condition, or a failing economy.

If we focus more energy on helping people and less on pointing fingers and placing blame, maybe we could find a solution to some of today's current problems.  So many people thrive on feeling superior to or smarter than others that they cannot feel any sympathy or empathy for others.

How sad.

 

 

Feb 13, 2010 02:06 PM
Gary Steuernagel ASSOC. BROKER, ABR, CRB
Keller Williams Southwest - Sugar Land, TX

Remember the old saying..."There but for the grace of God go I".  Those who condemn and mock the unfortunate should be careful, their time could come sooner than they expect where they will be in that situation.

Feb 13, 2010 02:34 PM
Anonymous
Alison Shuman, Coldwell Banker United, Austin, Texas

very very well said, all of you.

Feb 13, 2010 11:48 PM
#34
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

I've never passed judgement but have questioned the judgement of those playing the victim.  Some people have caused their own crisis, others not.  Each one you have to be impartial with.  We have not seen investors bailing on anything in the Midwest so we've just got plain old homeowners in trouble night & day.

Feb 14, 2010 02:26 AM
Kathie Burby
Coldwell Banker Mother Lode Real Estate - Sonora, CA
REALTOR, SFR, Tuolumne County Real Estate Guide

Diana - I couldn't agree more - well said. No one has the right to pass judgement on another. The majority of homeowners in trouble now or underwater (seriously underwater) did not do this to themselves. Many are victims of the economy and the down housing market. I know of a couple who defaulted on their home because the wife had cancer and the medical bills and her care took everything they had. Unfortunately, they had an agent who insisted on overpricing their house simply because she didn't understand short sales and didn't want to bother. She just wanted the listing! That is deplorable. It makes me angry when I hear others comment on how most people should not have been homeowners. Those people were the first foreclosures to hit and are long gone. We are seeing truly distressed homeowners now.

Feb 14, 2010 09:29 AM
Shanna Hall
Real Estate Solutions - Kirkwood, MO
I love selling houses!!!St. Louis, MO 314-703-1311

I agree with not passing judgment on others!!!  But I would also like to bring up the fact that some of these people are using the economy as an excuse.  In a lot of cases that I am seeing...  neither owner has lost a job, or any other form of income- they just spent too much money and are using this economy as an excuse to free themselves from their debt- or to bail them out of an "upsidedown" situation...  this is not helping our economy.  People need to be responsible for their decisions and responsiblities.  I currently work with more short sales and foreclosures than  the typical home sale- so yes I respect my clients and those that I work with but the phrase that burns my ears is- "Why should I be responsible for this house when I owe more than it is worth?  I always ask them if they were to make a million in the stock market would they like to keep it?  It is a risk we take as home owners and responsible adults... 

Feb 14, 2010 12:14 PM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

People in this situation need some compassion. And I agree that foreclosures are no going away anytime soon.

Feb 14, 2010 02:57 PM
Gina Chirico
Lattimer Realty - Fairfield, NJ
Real Estate Agent - Essex County, New Jersey

Great response from Besty Diann Kirby...."Until you have walked in someone else's shoes, you can't possibly know their struggles."  I'm not saying that some people didn't do this to themselves and some can make it better and are choosing not to but instead blame the banks and/or government.  I've seen bad things happen to good people.  There are homeowners that were forced into foreclosure and/or short sales because of job loss, illness, etc., some were in conjunction with an adjustable mortgage and some were never late on their mortgage but their life as the knew it was turned upside down one day. They didn't expect to be hanging on by a thread.   I do not judge these people.  Whether they are honest, hardworking people or deadbeats, its not my place to judge them.  If their house is for sale, I'll bring a buyer and if they want to sell their house, I'll do my best to market it and get it sold. 

Feb 14, 2010 03:28 PM
Virginia (Ginger) Schott
Cabins & Canoes - Port Jervis, NY
Assoc. Broker, CBR, CHMS

Diana- You made some great points.  The greed that drove the market to where it is now, distressed in many areas.  And the second wave of foreclosures is not going to be the people who took out lier's loans, but will be hard working people.  I know, I'm almost there.  When this crisis hit, we had a nice nest egg for slow times.  My family is impacted on both sides as my husband is a Union Electrician and I'm a Realtor.  We've been here before, we knew what to expect.  As I said we had a nest egg.  Well that nest egg is gone.  We are struggling to make our Mortgage Payment each month, I've taken a 2nd job to make up the difference, but it's still a struggle. 

The next wave will be people like us, who worked hard, put downpayments on homes, have a reasonable mortgage amount, but are no longer employeed, or have had a substantial cut in salary.  The Blame game needs to stop.  It's time to get people working again. 

Feb 16, 2010 03:05 AM
Karen Rittenhouse
www.JKKPropertyInvestors.com - Greensboro, NC
Real Estate Investor

Right.  Judge not.  There but for the grace of God...

This is a time of crises and we're all in it.  Let's get busy helping and learning what we can do.

Feb 16, 2010 08:53 AM
Beverly of Bev & Bob Meaux
Keller Williams Suburban Realty - West Orange, NJ
Where Buying & Selling Works

Someone has already said it best, 'there for the grace of God, go I.'

People are getting hit into a tighter and tighter circle, with less and less options to get out. I pray it doesn't get worse before it gets better.

Feb 16, 2010 09:45 AM
Jack Fleming
Weichert, Realtors - Wayne, PA

Diana

I had some first hand experience with this situation. In early 2004 I was served notice by my mortgage lender that they were going to foreclose on my home of 18 years. I had been in a different industry than real estate, Unfortunately three companies I worked for had gone out ouf business in 94, 98 and 01 respectively. Each time one went out of business it took a bite out of my earnings. So it was almost like getting started again.

Keep in mind I've been working since I was 18, had owned two homes and never missed or been late with a mortgage payment. I owed approximately $15,000 on my mortgage. I had about a 95% equity in the home. That was the balance left from my original mortgage in 86. I knew I was going to get behind and called the mortgage lender to see if we culd work out terms. The person I talked with stated that I should sell the home because I clearly could not afford to keep it. To that person I was just an account number not a real person. I asked to speak with the supervisor and was told they were too busy to take my call.

I paid my next payment late and got a terse warning notice. The payment after that was about 15 days late and I received a letter of forebearance from the lend along with about 4-5 phone calls. I started making partial payments over the next three months. That when I received a foreclosure letter not from the lender but from their lawyers.

As you are probably aware working anything out with the lawyers can be hell. The lawyers added about $5000 in fees for processing. I asked for a payoff statement from the lender and was told I'd have to talk with the lawyers. Getting the lawyers on the phone proved daunting. Every time I called I was forwarded to a recording telling me that any information the received could be used in the foreclosure. I finally got a return call one afternoon telling me my home was slated for sheriff's sale. I asked for the payoff statement again and was told I would receive it before the sale. I finally received the letter abot two weeks before the sale.

My wife and I then scrambed to pull together the funds to pay off the mortgage. We pulled money out of our retirement funds and deposited the money in our checking accounts. I made an appointment with the lawyers to go over the paperwork and pay off the loan. The day I went to the law firm's office for the appointment with the check and paperwork I was informed by the workout person there were additional fees that had been incurred in the intervening week. I then had to go to the bank and get another cashier's check and get back to the firm's office before 5:00.

So I have walked in those shoes. It was a walk I would never wish on anyone.

Feb 20, 2010 01:26 AM
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

There is certainly plenty of blame to go around.  I do feel for homeowners in default, but I do think we should be very careful to label them as victims.  They made the poor decision to buy too much house or use a risky mortgage.  I don't think it's necessary to pile on, however, as many of them now understand they made an honest mistake, and are trying to do the right thing.  We need to have viable options available to help those in need to get their lives back on track.  Thanks for continuing to write about it and bring awareness.

Feb 20, 2010 04:21 AM