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Comments about ‘Calif city looks to seize loans to ease mortgages’

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Published: Sunday, Aug. 25 2013 3:34 p.m. MDT

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worf
Mcallen, TX

History of poor financial planning by liberal leaders voted in by it's citizens.

You get what you voted for.

Cedarcreek320
Star Valley Ranch, WY

Yea, you guys in texas do it so much better......Not.

worf
Mcallen, TX

Cedarcreek320:

California vs Texas

Conservative Texas economy, light years ahead....Yes!

Say No to BO
Mapleton, UT

Why does this story generate a mental image of government-owned housing in the old USSR?

terra nova
Park City, UT

The strategy proposed is, in effect, no different than working through the process of a short-sale except for one key item: the existing owner gets to stay in the home.

Is that such a bad outcome? Isn't it more humane to allow the original owner to retain ownership as they pick up the pieces of their life after unexpected financial stress? After all, the bank is getting what it would get if they foreclosed. Eminent Domain requires fair payment for an asset. Or, are we so vindictive as a society that they must suffer?

lost in DC
West Jordan, UT

what the perpetrators of this plan fail to realize is if they go through with it, no lender will ever lend in their city again because of teh additionqal risk. If homebuyers cannot get mortgages, they cannot buy. If they cannot buy, values will drop even further.

Or if lenders do continue to lend, the interest rates will be much higher because of the additional risk they are assuming.

I guess these civic "leaders" just don't want credit availability in their communities.

worf
Mcallen, TX

terra nova---this is more about local government financial stress, and it's desperate grab for added funds.

Don't trust the ones, who caused the mess to begin with.

terra nova
Park City, UT

worf: Exactly. That's the reason trusting the banks makes no sense.

It is unfair to characterize this solely as "desperate grab" for cash by a money-hungry mayor.

I know a homeowner with a 6.75% mortgage on several hundred thousand dollars. If the bank would allow them to refi - they could stay in their home. But they've encountered job, investment and medical problems. Their credit has tanked. The bank's lending guidelines make refinancing to market rates impossible.

The bank is holding their foot to the neck of this family and they are very nearly at the point of letting go. Wouldn't it be better for the bank to allow a distressed refi? After all, if they get the money back, they can only expect to lend it out a market rates again. I realise it is not this simple, Fannie/Freddie guidelines make any such loan virtually unsaleable. But there is such a thing as portfolio lending and banks could reasonably expect a premium over par for lending in that situation.

It boils down to this: The banks get bailed out, but they refuse to help bail-out individuals. That's what is unfair.

Say No to BO
Mapleton, UT

If I understand this, the bank wrote a check for the full amount to pay the previous owner.
Let's say they paid $200,000. They are on the hook for that full amount.
And borrowing money from someone else has a cost.
Everyone at closing agreed to those terms.
Now, tell me where the big-bad-bank has a moral duty here?
The bank doesn't want to do anything except receive loan payments every month. They don't want the house or the foreclosure. They've got plenty of both already.
So, you are now going to add government to the mix with mandates.
Contract laws need support, not government intervention.

Third try screen name
Mapleton, UT

Here's a thought: Have the city refund all those property tax payments for these distressed homeowners. Get the school district and the library district and the college district to do the same.
Have the homeowners forward those tax refunds to the bank to get caught up.
How's that grab you, mayor?

Third try screen name
Mapleton, UT

Here's some data to chew on.
Richmond is in Contra Costa County.
The median property tax bill there is $3854. They rank 83rd in the nation.
The median property tax bill in Salt Lake County is $1588. They are 704th in the nation.
Sure, California property values are much higher, but that is part of the problem.
Like I say Madam Mayor. If you want to save those homes just refund all that money these people have paid in property taxes all these years.

RBB
Sandy, UT

Of course this was thought up by a Cornell law professor.

If the house is worth $200K and they are offering the bank $150K, the city is hoping to make $50,000 on the deal. A bank would be better foreclosing and selling the house for $200K.

Yes, it is sand that sometimes people have problems. What is troubling is that people expect the other party to change the terms of a contract when they need it, but would never agree to do so in the reverse situation. If the bank had a couple of hard years, would all of their mortgagees agree to add an extra 1% to their loan rates or pay an extra payment each year? Of course not!

What the mayor is doing is trying to do is to steal from the banks. A mortgage for $300,000 on a house worth $200,000 is worth more than $200,000. Many borrowers will actually keep their commitment and pay the $300,000. Thus, the fair market value of the mortgage is more like $250,000-270,000. Just another scam using the government to make money for their friends.

Liberal Ted
Salt Lake City, UT

Typical liberals. Don't be responsible for the contract you signed for the house you could never afford to impress people you don't care about. When everything hits the fan, use the power of government to steal other peoples wealth and savings to keep your own unsustainable lifestyle.

It's not a big bank money that they're stealing. That is a lot of hard working people that put money into savings that is then used to loan to these people under contract that they will pay them back for using their money. Instead of honoring that contract, they are going to be bullies and just steal from those that saved.

Hasn't there recently been articles about bullies in schools? What about anti-bullying legislation? I would counter sue these people for bullying and causing distress to millions of savers. Who knows how many suicides can be the result of these hate filled thieves. That is what it boils down to. They signed contracts, they borrowed too much, and instead of being adults and paying their dues; they will use bully tactics to steal.

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