Upside Down Mortgage

Archive for the ‘Mortgage Default’ Category

Mortgage Default Help

Question: Why does a mortgage default hurt a bank?

I'm not clear on how a defaulted mortgage seriously hurts a bank since the bank can foreclose on the home. I see that the bank expects income from the loan, and when someone defaults the bank loses that income. However, the bank then gets to posses & sell the home, which seems like it would help or even fix the bank's balance sheet by providing cash for the bank to use. So: where in this process does the bank lose a significant amount of money?

I understand that the bank loses money, I just don't get how it's lost.

Answer: Time is money and a foreclosure can be drawn out for a year or more. Then there are the attorneys fees and possible damages to the property and more time to market the property once they get through the foreclosure and then marketing expense when they have to pay Realtors and perhaps closing costs for the new buyer. Adding insult to injury is the fact that they will be selling against every other home in the market and they will have to discount it pretty heavily if they want to sell it quickly and then they had better hope no one steals the copper or the pipes don't burst when the home is not properly winterized and house sits empty all through the Winter.

The fact that the house is probably worth less than what is owed is just a starting point.

I have probably missed some of the ways banks lose money when a home owner defaults.

Home Sweet Home Mortgage - Best Buys w/ Alan Mendelson

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Mortgage Default List

Question: Once a Trust Deed is completed, should defaults still be held against me?

I have a trust deed that ended in Nov 2004, will defaults still stay on my credit file even though the accounts I defaulted in are now closed and agreements ended due to the trust deed? I have had no debt problems or missed any other payments since the beginning of 2001. I want to go for a mortgage, hopefully from a normal high street lender as I can't afford the high interests from specialist lenders and I still have defaults listed against me that where delt with by my Trust Deed so should they really still be showing on my credit history? I would really appreciate the advice, thanks.

Answer: Yes they should still show. The credit record is like a criminal record - just because you have served your sentence doesn't mean it didn't happen in the first place. Generally, previous credit problems are usually a predictive indicator of future problems - not a 100% certainty, but an indicator nonetheless.

Things you can do are (1) explain the situation and ask the mortgage sales people to speak to the underwriter (2) put as much of your own money into the property purchase as possible - a lower loan-to-value ratio will make lenders feel more comfortable. If neither works, you will have to accept that - initially at least - you will be paying higher rates to one of these specialist companies. Once you have a proven track record of mortgage repayments, you may find it easier to get a 'normal' mortgage or a lower rate.

Agents/Brokers -- List and Sell More Short Sale Listings

Mortgage Default Recourse

Question: If you dont pay your mortgage?

Think we will eventually get to this stage?

It was not only banks in the U.S. that freely loaned money over the last few years, but also those in India, and not surprisingly, many of their debtors have recently run into trouble making payments. Indian banks, inexperienced at collecting from so many defaulting consumers, often prefer to hire "goondas" (thugs) to settle debts the old-fashioned way, according to a January Wall Street Journal report. Though iron-bar beatings are frowned upon, some bankers say it's their only recourse because of the numbingly slow pace of the Indian legal system. [Wall Street Journal, 1-8-08]

Answer: The mafia have been doing this for years, if you don't pay up.
They use guns.

Mortgages & banks will be a thing of the past, one day.
They are becoming unsustainable.
We'll all have numbers tattooed on us & a one world currency. All done digitally& electronically.