Bank can't foreclose do to paper work error.

[keith ouellette]

It seems a guy in florida by the name of Joe Lents took out a 1.5mil mortgage on his Bocca Ratton home and hasn't made a payment since 2002. Every time a bank has tried he tells them to prove they are the mortgage owner and they have not been able to produce the proper paper work so h keeps winning in court. It seems there are a number of lenders who, after buying and sell loans in and out of mortgage trusts in a mad effort to make money in the real estate boom, didn't keep very good records. Not a big surprise when you look at the sub prime mess they got themselves into.

I don't know how to do a link but if you want to read about it go to Bloomberg.com and do a news search about banks lose to deadbeat.

[Ken Fitzgerald]

What do you expect from the same "financial wizards" who gave huge loans to so many people who couldn't afford them? You are surprised?

[Mitchell Andrus]

..."due to"...

[Ken Garlock]

No wonder the mortgage market is fubar. I don't feel the least bit sorry for the sleazy wheeler-dealers that set this up to happen. While I don't condone government intervention, I think some Federal body need to step in, bang some heads together and set up rules on how to make, and manage a mortgage.

What is wrong with 10% down, and monthly payments not exceeding 40% of net monthly income?

Revive the rule of thumb that the house you can afford should not exceed 2.5 times your annual income.

No second mortgages until 50% of the original mortgage is payed.

Owning a home is not a birthright, it is a mark of success that is earned through work.

No the government doesn't bail you out. One of our freedoms is the freedom to fail.

[John Shuk]

The Gov't did step some time ago and tell the lenders to lighten up a little so more low income folks could buy homes.
Anytime they touch something it comes out bad.

[keith ouellette]

No wonder the mortgage market is fubar. I don't feel the least bit sorry for the sleazy wheeler-dealers that set this up to happen. While I don't condone government intervention, I think some Federal body need to step in, bang some heads together and set up rules on how to make, and manage a mortgage.

What is wrong with 10% down, and monthly payments not exceeding 40% of net monthly income?

Revive the rule of thumb that the house you can afford should not exceed 2.5 times your annual income.

No second mortgages until 50% of the original mortgage is payed.

Owning a home is not a birthright, it is a mark of success that is earned through work.

No the government doesn't bail you out. One of our freedoms is the freedom to fail.

I can agree with most of the things you said but the last thing I want is a law that sets up limits on what banks can loan out on. That is just as bad as the government leaning on lenders to make more mortgages available to low income families.
Most of the problem is with speculators. The majority of sub prime borrowers that were not speculators are making their payments.
Let things run there course. No government bailouts. No government programs.

There was nothing wrong with the sub prime market until banks lent 100% land 120% loans to speculators but I would never agree to a law that would end speculation investments. Sometimes you have to let the fools go by the way side. It makes for a stronger smarter people.

[Ken Garlock]

Keith, I can see where I was not clear regarding govt. intervention. Maybe all we need is an addendum to the accounting standards and practices. I don't want the govt. to run the business as some have recommended, but rather some type of over-site with the authority to enforce the standards.

If it is indeed what the name implies, the sub prime lending is basically a bad thing. If you have to have an interest rate lower than normal in order to afford the monthly payments, you can't afford the mortgage, IMO. IF the Fed says the very best customers are to be charged x%, it is hard, if not impossible, to justify lending to some one with a greater risk at a lower rate. You say that the speculators were the problem in the sub prime market. Then, I must ask, are they in jail? If not, why not? Are the lenders in jail? Why not? These investment geniuses are ruining the marketplace for the family trying to honestly get ahead.

I have had my say, and you probably don't agree. But I respect that, and support your right to your opinion.

Happy saw dust....

[keith ouellette]

Ken;
I'm not sure if I read your last post correctly but it should be noted that sub prime borrowers pay a higher interest rate because of their higher risk factor. Thats why lending institutions were so hot to lone in the sub prime market. It made a lot of money for banks. They were expecting the houses to be of a higher value to make up for the defaults.

You are right. Lending standards do need to be watched carefully. I just realized as I was typing this... The banks are loaning our savings out. The depositors do need some protection so I guess I agree with you even more now.

[John Shuk]

I'm pretty sure the banking laws do dictate how much a bank can lend out relative to cash reserves. By giving money away with little concern they have little they can put out there on low risk debt now. A friend in the business tells me that this is one of the reasons that things could grind to a halt. I think the pigs are getting slaughtered at this point.

[keith ouellette]

I'm pretty sure the banking laws do dictate how much a bank can lend out relative to cash reserves. By giving money away with little concern they have little they can put out there on low risk debt now. A friend in the business tells me that this is one of the reasons that things could grind to a halt. I think the pigs are getting slaughtered at this point.

Lets hope the pigs aren't getting slaughtered. They may deserve it a little but if it happens we are all going to get pretty bloody.

[Mike Henderson]

I just realized as I was typing this... The banks are loaning our savings out. The depositors do need some protection so I guess I agree with you even more now.

To a large degree, the banks are not lending the depositors' money out for residential mortgages. What happens is that the mortgages are put into a pool (essentially a trust) and the trust is sold to investors as securities. These investors get their money back plus the interest paid on the loans. Residential loans were viewed as very secure investments so the shares were purchased by things like pension funds. The securities paid better interest rates than things like treasuries or corporate bonds.

The bank (but more likely a mortgage broker) made its money on the fees on the origination of the loan. The underwriters make their money on fees on the securities. The underwriters generally agree to take back loans that fail within a certain amount of time. The underwriter then would push the failing loan back on the originator but many small mortgage brokers went out of business so the underwriter is stuck with those loans. That's why many of the underwriters have had to take big writedowns recently as many of the loans have gone into default. Additionally, the securities often are covered by insurance to protect the investors so some of those insurance companies are in trouble.

This is not to say that the banks don't keep some of the loans in their own portfolio, but they try to select the best (most secure) loans to keep.

At least, that's how I think it works.

Mike

[This process meant that banks were not lending their own money out. If they were, they'd be limited by the banking laws as to how much they can loan compared to their deposits. Other people were supplying the money for those mortgages but they were not assuming the full risks - there was insurance to protect them. But when the loans default, someone suffers the loss.]

[Bryan Giles]

The Gov't did step some time ago and tell the lenders to lighten up a little so more low income folks could buy homes.
Anytime they touch something it comes out bad.

Hate to play devils advocate, but civil rights wasnt a bad thing.

But I do agree anytime the Gvmnt touches anything FINANCIAL it turns out to be wreck....

Too many politicians scrapping over who gets their cut and how much. LOL.

[Brian Elfert]

It seems a guy in florida by the name of Joe Lents took out a 1.5mil mortgage on his Bocca Ratton home and hasn't made a payment since 2002. Every time a bank has tried he tells them to prove they are the mortgage owner and they have not been able to produce the proper paper work so h keeps winning in court. It seems there are a number of lenders who, after buying and sell loans in and out of mortgage trusts in a mad effort to make money in the real estate boom, didn't keep very good records. Not a big surprise when you look at the sub prime mess they got themselves into.

Wouldn't it be better for the guy to just to pay his mortgage than to keep paying lawyers to sue the bank? I wonder if he pays the property taxes?

If the bank loses my loan paperwork does that mean I don't have to pay off that loan? I have to believe somebody is sending this guy a monthly bill that is going unpaid or they wouldn't be trying to foreclose.

I can't believe somebody who has the finances to take out a $1.5 million mortage would risk a foreclosure on his credit report unless the loan was a fraud to start with.

[Brian Elfert]

There are or were a lot of housing market where 2.5 times income isn't going to buy any sort of liveable house. Of course, liberal lending was part of the reasons those markets got so overheated in the first place.

My current house is my first house and I had about 35% equity when I built it in 2001. Even so, the mortgage was more than 2.5 times my income. There is little chance of a foreclosure unless the economy really gets bad.

[Jason Roehl]

Wouldn't it be better for the guy to just to pay his mortgage than to keep paying lawyers to sue the bank? I wonder if he pays the property taxes?

If the bank loses my loan paperwork does that mean I don't have to pay off that loan? I have to believe somebody is sending this guy a monthly bill that is going unpaid or they wouldn't be trying to foreclose.

I can't believe somebody who has the finances to take out a $1.5 million mortage would risk a foreclosure on his credit report unless the loan was a fraud to start with.

Brian, if you read the article, you'll see that the guy bought the house, but then his business went in the toilet. He's in Florida, which perhaps doesn't have property taxes. (It's either that or income taxes, I don't recall which). Perhaps he has enough income now to pay property taxes and his lawyer--he's not doing the suing, the current mortgage holder is, but they can't prove they hold the primary lien to the satisfaction of the courts.