California is imposing a 90-day moratorium on housing foreclosures under a new law that took effect Monday.
The law is expected to make lenders try harder to keep borrowers in their homes. Lenders must prove they tried to modify the delinquent loans before they can begin foreclosing.
But supporters acknowledge the California Foreclosure Prevention Act won’t stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.
The bill passed in February is similar to the Obama administration’s Making Home Affordable program that began in March.
It is a ploy to force banks to renegotiate with deadbeat customers, has little to no chance of working.
Why would anyone be willing to repay a loan on a home that is 30% - 50% underwater even under more favorable interest rates?
My guess is that most of the renegotiated loans will still end up in foreclosure anyway with the guise of the new loan simply being used as a stall tactic. I mean what do these folks really have to lose by juicing the system?
It is a two-way street though, the deadbeat borrowers are attempting to get something for nothing while the banks really don’t want to assume the deep losses that have to be monetized before this thing is finished. The banks have to understand that no one is ever going to come along and repurchase these homes for anywhere near the retail prices seen at the peak of the housing bubble.
The banks already know they will never see the mortgages repaid but they are doing everything possible to keep those losses off the books because if fully accounted for they would be found insolvent.
But that is exactly what needs to happen to flush the crap out of the system.
Not all banks participated in these shenanigans and those that acted responsibly should be rewarded by swallowing up the fools that wrote loans that would never be repaid. that can’t happen as long as the insolvent banks are allowed to remain in existence.
Bankruptcy is a good thing if it is used properly and as intended.
I inspected a condo in Orlando last week. The buyer was paying $35000 for the unit. The unit is owned by the bank and had a mortgage of $235000 on the unit. One of the agents told me that over half of the units in the complex were now owned by the bank that financed them. The complex was converted from apartments to condos in 05.
The unit was in decent shape. Needs less than 5000 to be move in ready. Exterior of the units appeared to be in fair shape. They are in the Conroy & I-4 area. Not a bad place for $35000. Their daughter is going to school in Orlando. They decided to buy instead of rent for 4 years.
Yesterday morning, 3/2/2 1855 sq. ft. built in 2007, 1/4 acre, builder foreclosure, no Chinese drywall, needed a fridge and a few low cost things, less than one large for the repairs…60K.
Easily would have been 275K where it sat three years ago.
California is ahead of the curve on everything. Including the first state to go bankrupt!
