Re: An answer to foreclosure problems - arson

On Mon, 14 Jan 2008 16:24:35 +0000, EskWIRED wrote:

In misc.survivalism, Curly Surmudgeon <Curly.is.not@xxxxxxxx> wrote:
On Sun, 13 Jan 2008 14:53:30 +0000, EskWIRED wrote:

In misc.survivalism, Curly Surmudgeon <Curly.is.not@xxxxxxxx> wrote:
On Sat, 12 Jan 2008 16:55:26 +0000, EskWIRED wrote:

In misc.survivalism, Curly Surmudgeon <Curly.is.not@xxxxxxxx> wrote:

I wasn't aware of Deficiency Judgements despite 25 years in California
real estate as an investor until mentioned here a short time back. Such a
vehicle would massively distort the market from what we experience in CA.

Actually, I'd say that foreclosure extinguishing the debt is a market
distortion.

I guess that is part of due diligence, be aware going in.

Well, yeah. So going in, I'd look for a low initial investment. That
adds to risk, of course, but my risk is capped at my low initial
investment, distorting my decision to buy a marginal property.. I have
little to lose - if I have vacancies, and can't make a profit (even
considering my low invstment), I simply give the keys to the bank and
walk away.

Not really, your credit is severely damaged preventing a repeat
performance. Lenders will report your transaction as a charge off.

I said little to lose - not nothing. Me, I'd rather lose a rating than
lose cash. And besides, in the context of commercial RE, every project has
a different entity as owner. If XYZ Trust loss its rating, I'll form ABC
Trust.



That is VERY different from the typical transaction, where a buyer can
be saddled with a losing property that he owes money on, so he avoids
marginal investments.

"Typical"? I thought we'd gone past your misunderstanding. What you
think of as "typical" isn't, it is prevailing standard in your region.
That is what this distraction is all about, correcting miscomprehensions.

Let's not argue about what is 'typical' - neither of us knows. We'd have
to research it. But I'll point out that the whole country is based on
English Common Law,

If you don't want to discuss a disagreement then stop making assertions
that you know I disagree with.

except maybe some areas. And this area is based on
English Common Law, so I think I'm on solid ground.


It seems that when you sign a promissory note, you should live up to
its terms. Giving the collateral to the lender, no matter how badly
the collateral is impaired, seems gorssly unfair to me. It
encourages marginal investments to be abandoned, or at least, to
prevent the owner from putting more capital into them.

And makes the lender more cautious.

Yes, but the lender is not the one who shoud decide, nor is the lender
the one who shoud take the risk. If lenders tae this risk, they will
have to charge higher interest rates to compensate them.

Uhm, that's quite a standard to hang on someone else. When I invest my
money should I depend on others to mitigate the risk?

No. Your investment is your risk. The bank takes the risk of bankruptcy
of the borrower.

Exactly, that's why they charge varying interest rates and include risk as
one parameter.

Do I get a "Get out
of Jail Free" card if economic conditions change or the risk wasn't
recognized? No, those who invest, lending is an investment, bear
responsibility for their own exposure.

Risks are allocated in business deals. The lender takes the risk that the
borrower does't repay, and has insuffcient other assets to get the money.

You thik that the bank should take the risk that the property may get ru
down and be no longer good collateral.

Yes, that is why they charge varying interest rates and part of the risk.
Absolutely, yes.

If you fail to insure, and reap the profit from that, why would
allowing the burned-out hulk to be foreclosed be a fair way to repay
your loan?

Rephrase, unintelligible.

When borrowers get in trouble, they stop paying their expenses. They
put the money into their pocket. one big expnse is insurance, which
could go into the pocket of the borrower. If he does that, and there is
a casualty, he can then walk away with his savings, and give the
uninsured ashes to the lender.

Every mortgage I've had pays insurance out of their own escrow account
into which you pay on a monthly basis.

That is common. But not universal. It is very uncommon in commercial
loans. It may well be that in jurisdictions like yours, it is universal.

We're talking about foreclosure of homes here. Where do you have home
mortgages that do not include an insurance clause? If it were on topic
I'd also question the assertion that commercial mortgages do not include
an insurance clause too. In every loan document I've seen there is a
clause which requires an insurance policy for at least the mortgage amount
(and lenders have been pushing this envelope too with reappraisals)
_in_the_name_of_the_lender.

Your scenario accusing borrowers of cheating the lender above is
impossible.

Your claim is invalid.

Naw - the point is that borrowers stop paying the bank, while pocketing
things like rent and other income, while stopping paying expenses.
Without the ablity to get a deficiency judgmet, the borrower has a
stronger incentive to do it. Frget insurance, if you've only seen it
excrowed and not payed directly.

Rents, obviously, but what other "income" are borrowers pocketing? There
is no incentive to default, only penalties which remain for 7 or more
years severely impacting their economic well being. And you
misunderstand, again, the import of states wihtout deficiency judgements.
Our system is streamlined and it is possible to take possession in 90
days.

Do not extrapolate your local conditions or legalisms nationwide.
America is ostensibly 50 independent states and each has some
exceedingly strange laws, covenants, restrictions and proceedures.

Real property law is nearly universal, and has been in place, in its
current form, for about 400 years. At least English Common Law.

Spanish Land Grant law preceeds the founding of America by centuries.
What you call "Real property law" isn't universal either as I, and others,
have repeatedly demonstrated. Why do you revert forcing us to repeat
ourselves?

Not here, or in the West in general. In California you do not get a
trust deed until the lender is paid in full. I believe that to be true
in Texas, Nevada, Utah, Colorado, Arizona and New Mexico too all of
which were intitially under Spanish Land Grant law.

Could be. But except for Louisianna, and the states you mention, the
whole country is English Common Law.

I doubt that. Even if it were true you are dismissing a tremendous amount
of land area for no rational reason except to make debate points. Stop
resisting the notion that the universe does not rotate around your limited
area of knowledge.

You got yourself into this mess because you speak in absolutes as if your
opinion is the only valid idea on usenet. Ain't so on many levels. Offer
your experience but stop trying to shove it down our throats.

-- Regards, Curly
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