Foreclosures...


Da_Sperm

Da_Sperm

New Member
In previous threads, there have been topics that lead to the discussion of foreclosures. Lets talk about some of the 1) CAUSES and 2) SOLUTIONS.

Causes, in no particular order.
ARM
  • - rate goes up.
  • Loss of job.
  • Illness.
  • Divorce.
  • Mismanage money.
  • Second mortgages, LINES of credit

Solutions.
4 to 6
  • months of RESERVES
  • Go with Fixed rate mortgage.
  • Don't get divorced???
  • Manage money??

I know sort of understand why banks required 20% down in order to buy a house. Today, we get into houses with ZERO down, and when times get hard, its EASY for us to walk away from the house. We have nothing to lose.

I believe the best solution to avoiding foreclosure is 1) getting something you can handle and 2) having RESERVES for when the bad times hit.

I know this is easier said than done.
 

Ah, 20% is only required on a conventional loan.
FHA loans require 3%
And VA loans require something else, less than 20%
 
Most anyone with good credit can do 0% down; and can even roll in most closing cost. Big down payments protect you and the bank because a house/owner with equity has way more options than a house/owner with no equity should you need to sale quickly.

The banking industry is partly to blame for these foreclosures because they're approving people for loans that they know will soon put these buyers in financial hardships. I see it everyday. DTI ratio requirements are normally around 45% but should be more like 30%. That would lessen foreclosures.
 
nevaehinvesting said:
The banking industry is partly to blame for these foreclosures because they're approving people for loans that they know will soon put these buyers in financial hardships.
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It's sad to say, but this is what we hopefully can capitalize off of. People should know their limits on what they can or cannot afford. But since they are taking a gamble, we're gonna be there to capitalize off of their bad choices....:)
 
Da_Sperm said:
Solutions.
4 to 6
  • months of RESERVES
  • Go with Fixed rate mortgage.
  • Don't get divorced???
  • Manage money??
Click to expand...

Other solutions

- Sell your home before it goes into foreclousure (if you are certain you will not be able to catch up with the payment).
 
SAME OLD G said:
Other solutions

- Sell your home before it goes into foreclousure (if you are certain you will not be able to catch up with the payment).
Click to expand...

You would not believe how many people are SHAME to sell their house before it gets too late. The problem with pre-foreclousure is we are emotionally tied to the house. There are too many memories to just simply sell it. If you don't see a way out, SELL IT. There are investors out there would will buy it and give you $2000.
 
Mismanaging money and buying over your head are big culprits to foreclosures. Don't buy anything that you can't handle alone. So, if a divorce does happen, you can handle it.

And that other stuff Sperm said.
 
Cause- getting a house for the amount that you are approved for rather than what you can actually afford to pay for and maintain.

Solution- get a house that gives you a note which will leave cushion in your monthly budget.
 
JSTUS said:
Cause- getting a house for the amount that you are approved for rather than what you can actually afford to pay for and maintain.

Solution- get a house that gives you a note which will leave cushion in your monthly budget.
Click to expand...

I would add the the solution is to build RESERVES for things you have no control over (Layoffs, sickness, divorce, etc). Sometimes, you can get a house well under what you can actually afford to pay, but a life changing event (LAYOFF) could prevent you from paying a SMALL NOTE ALSO. So, make sure you have some RESERVES to get you through the hard times.
 
Robber said:
Mismanaging money and buying over your head are big culprits to foreclosures. Don't buy anything that you can't handle alone. So, if a divorce does happen, you can handle it.

And that other stuff Sperm said.
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:tup:

Some people are just greedy and get caught up in the Jones syndrome which can be detrimental. Also, one has to keep their eyes on women. It is something in their DNA that make them over spend. :lol: :emlaugh: Men have to learn how to tell them go sitcho azz down. :lol: :emlaugh:
 
Buying a big arsed house and not realizing that big houses require MAINTENANCE.

Yard Services
Multiple AC Units
Multiple Hot Water Heaters
Pool Service
HOA fees
etc.....
 
ABE said:
Buying a big arsed house and not realizing that big houses require MAINTENANCE.

Yard Services
Multiple AC Units
Multiple Hot Water Heaters
Pool Service
HOA fees
etc.....
Click to expand...
Out of all you listed I'd hate that the most - the "association" moreso than the fees. I do not want to have to abide by someone else's rules concerning my dwelling.
 
Fortitude said:
Out of all you listed I'd hate that the most - the "association" moreso than the fees. I do not want to have to abide by someone else's rules concerning my dwelling.
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HOA(s) are a good thing when ran properly. I'm sorry to tell you but trifling people purchase homes and will drive down your property. You do have the option of reading the covenant before purchasing the home. I am a board member (treasurer) of a HOA and I've seen first hand how stupid people can be with little regards for their neighbors. For instance, we had one nut to try and run a mechanic shop out of his home. We had code enforcement on his azz quicker that you can say fix a car. Unruly children running out of control.........we have police patrol to handle that. I can name dozens of issues that are addressed but would be typing all day. I would rather have it than not.....I guess it is a matter of choice. The fees are used to assist in the up keeping of the property and reserves should be kept for emergencies and big ticket projects. Hopefully when one wants to sell their property, the HOA has given the homeowner a chance to maximize the profit of the sale by doing their best to keep the community presentable.
 

ABE said:
Buying a big arsed house and not realizing that big houses require MAINTENANCE.

Yard Services
Multiple AC Units
Multiple Hot Water Heaters
Pool Service
HOA fees
etc.....
Click to expand...
You said a mouthfull here. I used to pay for yard service, now I handle it myself. Got multiple units, and one needs to be replaced (Home Warranty tripping) and other is on a breaker box that's too small to handle it. Took a bunch of trips by the warranty maintenance man to figure that out.) Got a pool that I barely maintain on my own, but supplies are expensive as all get out. A sizeable house means sizeable utilities, too.

As a solution, people might wanna look into some type of disability insurance, so if you can't work for extended periods of time, it'll take care of most (if not all) your needs, while you're down.
 
We keep wanting to blame other people for our debts! There is no reason to go into foreclosure. It takes months for a house to be foreclosed on, and that is ample time for someone to try and sell, or even rent the home they are in. Even in a buyers market like we are in now, you have options. Banks, lenders, etc. will work with you to help you keep your house. That goes for any creditor. My mother always told me that you should never let a bill colector call you. If you know that there is an issue, you call them.....you are the one that owes them money.

It is not the fault of banks lending you a certain amount of money, it is the fault of the individual(s) for not managing and taking care of their responsibilities. I get sick and tired of people in the country wanting to hold everyone accountable but themselves.

If you can pay it back, then don't borrow the money. No matter if it is 20 or 20,000.
 
Predator Lenders bear responsibility also. These lenders "budget" loans and know when people cannot afford them. That is one of the reasons that they initiate "creative financing" such as ARMS and Balloon Note loans with payments based on extended amortization or step payment increases. In many instances, the lenders know that the "sub-prime" loan will not be flipped to formidable terms. The clientele that these people target is unconscionable. The way they gather some of their listing of prime loan rejects is merely one of the attributes of their targeting. The solicitation job on these poor and troubles souls in many instances is phenomenal. The dollar power behind these lenders are strong. The perpetual recycling of sub prime loans is nothing short of a constant revenue flow for these multi-conglomerates without ever relinquishing a deed. Yes.......It is a game (like it or not) and many poor people are the duped prey.
 
But Jrock, shouldn' people be responsible enough to know that they can't afford the loan? Why is it the lenders job to say no to somone that should be able to say no themselves. No matter what happens, there is always the option of saying NO. I just feel that personal responsibility must be taken into account.
 
Suge said:
It is not the fault of banks lending you a certain amount of money, it is the fault of the individual(s) for not managing and taking care of their responsibilities. I get sick and tired of people in the country wanting to hold everyone accountable but themselves.

If you can pay it back, then don't borrow the money. No matter if it is 20 or 20,000.
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But the flip side of that is the lender does bear some responsibility.

let's say that you have a relative/ friend who asks to borrow money and you damn well know that he can't (or won't) pay you back. But you loan it anyway. When you don't get your money back, you have to accept the fact that you didn't have to loan him the money.



jrock is right (for once :D ) These predatory lenders preyed on poor people and gave 'em outrageous loans with ridiculous terms, knowing those people couldn't afford them.
 
mighty hornet said:
jrock is right (for once :D ) These predatory lenders preyed on poor people and gave 'em outrageous loans with ridiculous terms, knowing those people couldn't afford them.
Click to expand...

It is the job of the lender to make money. Many of these lenders SELL that NOTE within 60 days of closing on the loan. They make their money on the FEES to get the loan, not the loan itself. They sell the note to banks who can afford to carry the note for 30 years.

Its the FEES that lenders are after, so they could CARE LESS if the person makes ONE PAYMENT on the loan, since they probably have a buyer for the note before they even close on the home.
 
Da_Sperm said:
Its the FEES that lenders are after, so they could CARE LESS if the person makes ONE PAYMENT on the loan, since they probably have a buyer for the note before they even close on the home.
Click to expand...
hence, the irresponsibility and "carelessness" that we were speaking about.
 
Here we go again, the victim mentality. It is always someone else's fault, and no one ever takes the responsibility.

Using your same example MD, if that friend knows that he can't pay the money back, then he shouldn't borrow it. There is still some personal responsibility that must be factored in. And that is a much greater factor in foreclosures etc. than the "big bad" predatory lenders.
 
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