Mortgages - the biggest questiongreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
For anybody that hasn't paid off completely on where-ever they'll be residing at "game time":
Can the bank take it back (foreclose) ? For those who say no, please justify. This can be a pretty ruthless capitalistic system we've got going here. Unless you say, they can't take it back - they'll be dead men walking.
-- blue_himalayan (email@example.com), December 04, 1998
Someone who knows- please remind me. Don't most loans have some statement about the bank being able to call it in *for any reason*, given 'X' days notice? I'm thinking the last one I signed said X = 180 days. Seems like I even asked about it and the reply was something like, "sometimes the regulators make us balance our inventory, as long as your payments are current, 180 days should be plenty of time to get refinanced..." I'm thinking the fine print on my credit card says this to, but x is much shorter.
Was I just dreaming this? I know most banks never call in a good loan. They just continue to carry it, or sell the paper, even when the rate they loaned you was at 8% and then prime moves to double that. It would be very bad for business if word got around that they actually did it. (In the midwest in the 80's, banks did it to farmers and more than a few bank officers were shot dead in their offices...) Seems like that was part of what the S&L debacle was about. They had so many low interest loans out that they chose to make loans to risky ventures at very high rates. Then they could continue to pay bills and offer competitive CD rates.....
I hope to pay off all mortgages and maybe just buy some dumpy trailer on a small acreage in the rural areas near here. I am sure I would not be initiating an ajustable rate mortagage at this time. Can you spell hyperinflation?
Jeesh its late - I am running off at the mouth again. Someone who has some actual facts: please help me stop before I hurt myself.
-- Farm Woman (firstname.lastname@example.org), December 04, 1998.
I am a bankruptcy lawyer beginning my 15th year of practice.
It must be obvious to you that the Lenders will take backt he properties if the payments are not timely made.
First, the FDIC has reserve requirements that are higher when a loan is "non-performing" and the lenders simply cannot afford to foreclose on the property, even if it is added to their REO inventory and acannot be immediately liquidated.
Second, they have no soul. Think of the early 1930's, foreclosure of farmland, etc.
Advice: Pay your mortgage early by listing on the face of the check date the payment is to be applied. (At least that's what I'm going to do.
-- Vito Barbieri (BarbieriV@aol.com), December 04, 1998.
Question for Vito:
Yes, if we have a depression, those who cannot service their debts will lose their property to those who can. But in the event of a widespread, long-lasting power failure? Or a complete economic breakdown, where the banking system and government fails? Do you think that in those worst-case scenarios, property belongs to whomever can physically defend it?
Let's say power returns after a few months and some semblance of an economy resumes. Would mortgage debts even be meaningful?
-- Flint (email@example.com), December 04, 1998.
. B.H. I have often pondered this very question and talked to many proffesional friends (though not my banker!) about it. We have come to the general conclusion that the depression conditions will be so exteme that there's no way in hell the powers that be will allow millions of Americans to be tossed out on the street. Whenever I go over to Atlanta, I am astounded by the number of very high-dollar homes going up by the tens of thousands. People are buying all the house they can possibly afford. We are in for the mother of all real estate crashes even without y2k. This goes double for commercial and office spaces and buildings. Besides, what are the banks going to do with all the homes and office buildings the foreclose on? Who will have money to buy them? All my relatives laughed at me when I moved out here to my farm in /84. You've got a college degree and you want to run a chicken farm? You're wasting your life. He who laughs last......................
-- doktorbob (firstname.lastname@example.org), December 04, 1998.
If they have the means to foreclose (ie they have power and are open for business; post office operating etc.), I'm guessing I'll have the means to pay.
-- Bill S. (Bill_S3@juno.com), December 04, 1998.
If a debtor makes even a *modest* attempt at satisfying their obligation, the lender will go out of their way to work with them. The *last* thing a banker wants in a recession is another damn house. Mow lawns, dig ditches, or sell things to make partial payments. If a debtor will show some integrity, the lender will reward it. They do *not* want your house.
-- Jeffrey G. Bane (email@example.com), December 04, 1998.
We spoke with our banker about this very thing. He said if thousands of people were not paying due to catastrophic events they would not be able to forclose. Putting all out on the streets and leaving houses empty would only lead to the destruction of the property by vandals.
-- More Dinty Moore (Not @this time.com), December 05, 1998.
I have a more basic question. IF the Iron Triangle fails...that is POWER, BANKING and TELECOMMUNICATIONS how will it be possible for any bank to have any resources to call in loans? Mind you, I am not "banking" on that with my home loan...but nevertheless that IS the scenerio for a moderate infrastructure failrue.... How will they call in their loans if they no longer exist?
-- Donna Barthuley (firstname.lastname@example.org), December 05, 1998.
There was a famous Minnesota Supreme Court decision that was upheld by the U.S. Supreme Court during the Great Depression that allowed for families to keep their homes even if they could not repay the mortgage in a timely fashion.
In a worse case scenario, it is almost impossible to envision the majority of mortgage holders evicted from their homes.
In fact, now might be the best time to buy a house. Imagine trying to secure a line of credit after y2k.
As the great, all-powerful, Satanic rocker once said: "Give me shelter."
-- Squat (Homesteader@Texas.com), December 05, 1998.