I have always maintained the following which is just basic fiduciary law:
Banks and mortgage servicing companies have duties to their clients (like mortgage pool operators, Fannie Mae, Freddie Mac and others) to collect as much money as possible. In the case of banks...they MUST collect as much as possible or face suits from their shareholders for gross negligence.
When we negotiate with the above parties on behalf of buyers and sellers as loss mitigators (essentially our main business) we MUST assume that the banks will follow these duties outlined above.
Lawyers, Realtors, Mortgage Brokers, newspaper column writers, Title Companies and other "experts" often tell their clients something like this: "banks never collect on these debts....it is bad PR". These naive opinions hark back to the old movie starring James Stewart "Its a good Life" where the "bank" is owned by the guy in the big house at the end of the street and can be convinced to "do the right thing". This is before public ownership of banks and a secondary mortgage market where new duties are created.
In fact, one of the greatest growth businesses in the US today (and especially Florida which is a "recourse state" on mortgage loans) is the debt collection business. These are often disguised as law firms or separate departments of these "banks" that disguise themselves as outside bill collectors to avoid PR blowback.
We do and have always explained this to our listing clients. I do not give legal advice in Florida because, although licensed to practice law elsewhere, I am not a member of the Florida Bar (God knows that all of the "experts" above are mostly not Florida Bar members). In fact, our clients (and everyone else's) NEED legal and tax advice.which we recommend in every case...that is from a Florida Bar member knowledgeable in today's mortgage and foreclosure markets (most are not).
Please read: The Big Short just out by Michael Lewis. It gives the incredible story of the sub-prime market and it's interaction with the basic pitch of selling the concept of "Refinance to pay of higher interest credit card debt". In the 90s huge numbers of sub-prime lenders raised huge amount of capital by going public with the above concept as its pitch. By 2002 ALL of them had gone broke or otherwise ceased to exist as independent companies....the concept failed because of huge losses. However, by 2002 the syndication of high risk mortgage pools and the creation of mumbo jumbo derivatives (basically hidden from all parties) became a "gold mine" for Wall Street and all of us in the real estate and mortgage business as real estate prices climbed to levels not sustainable (because they were financed with "funny money"). The concept, having failed due to false premises, did not slow down...it increased radically!
Basically we are in the middle of a social revolution brought about by a series of events that started just after WWII. The "American Dream" was and is "a crock". Europeans and other educated people throughout the world have laughed at us for years! The idea of the lower middle class (and all the other "classes) with stagnated incomes (due to lack of education and competitiveness of our businesses in a newly energized global marketplace)... buying a house at many times their after tax income to house consumer goods that were not afforded in the first place is incredibly laughable.
Tell me...."has the market bottomed yet"?
PS: Of course, Congress, assuming it will pass US Constitutional muster, can pass laws that say that "black is white" or "all debts are hereby forgiven" or "you cannot collect on your debt".