When the gov't mortgage bailout plans were first being discussed, we looked at the possibility that many underwater homeowners would simply 'walk away' from their mortgages when their ARM interest rates were due to reset. Many thought that this would NOT happen, for a variety of reasons. However, it appears that homeowners are walking away in droves ... and some are actually attempting to earn a profit helping homeowners to do so !!!
(snip)"
If you are facing or considering foreclosure, you're not alone.
* Are you stressed out about your mortgage payments?
* Do you have little or no equity in your home?
* Have you had trouble trying to sell your house?
* Is your home sinking under the waves of the real estate crash?
* What if you could live payment free for up to 8 months or more and walk away without owing a penny?
Unshackle yourself today from a losing investment and use our proven method to Walk Away.
If you QUALIFY for our plan:
Your lender WILL NOT be able to call you in attempt to collect!
Your lender WILL NOT be able to collect any deficiency or loss they may receive by you walking away!
You WILL be able to stay in your home for up to 8 months or more without having to pay anything to your lender!
You CAN have the foreclosure REMOVED from your credit!
It's important to act now before it's too late!
Let us help you."(snip)
Russ Winter sums it up rather well ...
(snip)"A new trend is a foot. Homeowners (fraudsters?) are jingle mailing, and just turning over the keys. In places like California there are few consequences to doing do. “Lenders” should not be “surprised” if that’s the least line of resistance. Who would a thunk that owners without skin in the game would turn over the keys where the bank eats the loss? Surprise, surprise, there is no incentive to refinance.
Richard DeKaser, chief economist for National City Corp notes that while all credit metrics are deteriorating, mortgage delinquencies are rising disproportionately. “That makes sense if people are choosing to walk away,” The stage is set for this kind of thing particularly in California, where huge numbers of buyers used low or no-down deals to buy homes. The trend has even spawned at least one new business, San Diego-based YouWalkAway.com, which for a fee of $1,000 purports to guide clients through the process of ditching their mortgages. It launched in early January, and says it has already signed up 180 clients. California is a bit of a safe haven for these borrowers, since banks that repossess and then sell a foreclosed property for less than the mortgage that was owed on it cannot come after borrowers for the difference - as long as it’s the initial mortgage, one that has not been refinanced. So if a borrower owes $200,000 and the bank sells the house for $170,000, the borrower comes out of it debt-free.
And now there are tax incentives to abandon, or wait for the sheriff.
And now skipping out on a home is easier, thanks to the Mortgage Debt Relief Act of 2007. Previously, if a bank sold a foreclosed home for less than the mortgage balance and it forgave the difference, the borrower had to pay tax on that difference as if it were income. Now the IRS will ignore it
Next these jingle mail and foreclosured houses involve a cat and moose game of “who owns it”.
Rust Belt cities, already beaten down by a miserable economy before foreclosures began spiraling nationally, are moving to cut the number of houses left vacant when the mortgage can’t be paid. At stake are valuable tax dollars and the survival of neighborhoods. “The homeowner just assumes, well the bank’s going to take my house, but the bank can make the economic decision not to take the house,” said Cindy Cooper, a Housing Court prosecutor in Buffalo. “Then that leaves two parties walking away, each one thinking that the other is going to take care of the house.”
Also not too surprisingly we learn that a large number of these racketeers lied on their applications about owner occupancy. My personal belief is that many foreigners were involved. When I lived (rent) in the glitzy Pearl District in Portland, I would notice the realtors and foreign looking people on the sidewalks. Once I walked by what looked like a speculator tour (rackets, or just greedy SOBs gaming the system?), and they were speaking a foreign language. At one point I did a title search of owners and noticed many foreign names. There were a lot who sounded Middle Eastern, and of course Asian. At night probably half the units there never had lights on. The garages were always half empty. The local Subway shop owner told me most of his business were construction workers from the “booming” building sites, or people who worked nearby. For a high density neighborhood, the Pearl always seemed just too quiet. It’s funny how stories such as this are titled, “speculators accelerated the downturn“. What about the upturn?
As lenders pore over their defaulted mortgages, they are learning that the number of people who bought homes as investments is much greater than previously believed. Such borrowers turn up frequently in analyses of loans that defaulted within months after origination. In many cases, these speculators lied on loan applications, saying they intended to live in the homes in order to obtain more favorable loan terms or failed to provide the requested information. Roughly 20% of mortgage fraud involved “occupancy fraud,” or borrowers falsely claiming they intended to live in a property, according to an analysis by BasePoint Analytics.
The earlier marriage of the Bubble fraudsters looks like this.
What about fraudulent loans, loans where borrowers (or lenders) inflated income, downsized debts or claimed employment that did not exist? “If there are a lot of fraudulent loans out there then large numbers of lenders may ultimately be forced to buy back loans,” Saccacio said. “But how many fraudulent loans are there? No one knows for sure, but recent studies suggest the problem may be far larger than imagined.”
The Financial Crimes Enforcement Network reported in November that “suspicious activity reports” regarding possible mortgage fraud had “increased by 1,411 percent between 1997 and 2005.” Lenders have access to tax records through the IRS Form 4506 provided by borrowers, a form that allows lenders to review past tax records.
In testimony before the Federal Reserve, Steven Krystofiak, President of the Mortgage Brokers Association for Responsible Lending, says his group compared the income figures for 100 stated-income loans with IRS records. What did they find? Ninety percent of the stated-income loan applications showed earnings that were exaggerated by at least 5 percent. Almost 60 percent of the stated amounts were exaggerated by more than 50 percent."(snip)
from
this would seem to point to a bottom line point that the subprime mortgage meltdown is preparing to enter a second phase, where the repurchasers of mortgage paper and repackaged mortgage bonds will initiate fraud lawsuits against the mortgage writing banks ... which by law would force them to 'buy back' fraudulent mortgages. Based on the Credit Suisse statistics, up to 90% of stated income mortgage loans can be claimed as fraudulent !



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